I have owned rental property for twelve years now. Just collecting rents and doing what “investors” have done forever: Letting my tenants pay my mortgages and build my equity.
I received an offer of $125,000 for a multi-family property I had purchased seven years previous. Now since I had only paid $67,000 for the property, I immediately accepted their offer! My mortgage balance was only about $50,000, so I had some cash to play with.
I did a 1031 tax exchange into some single-family properties. I got a couple under contract and looked and looked for the last house to buy. Finally, I called a Realtor “friend” on an ad for a house listed for $39,000. It was already rehabbed. Seems an out-of-town guy had picked it up at a VA auction, rehabbed it, and had it on the market. It had been sitting about three months. I offered, and they accepted $33,000.
The week after I closed, I ran an ad for rent for $650/month, being that all I knew to do with real estate was to rent it. No takers, and I wasn’t surprised in November. The house is on the small side, only about 1000 sq. feet without a basement or garage. I was pretty discouraged (after only a week…ugh)
So, I offered owner financing. I had just found CRE Online and had picked up a few ideas. I got the house sold under contract in a week and closed a month after my purchase for $49,900 with daddy co-signing their note and with $5k down, 2-year balloon, 10% interest.
The mistake I made was selling under contract for deed. Seems I had received bad advice from my attorney, and it made a little mess out of my 1031 exchange, but it was all resolved without too much hassle or costs.
I recently “tickled” the buyers to get new financing, and we just closed Thursday. I got a check for $43,000, $5,000 down when they originally purchased, and about $7,000 in cash flow: $55,000 profit from nothing!
If I would have rented this house as I had “always done,” I would have gotten $550/month rent due to the season. I would have paid for a new roof (buyers put one on), paid for a new driveway (buyers did that), paid for new gutters and downspouts (buyers did that) and would most likely already had a vacancy running up other expenses. I could have still sold the house today for 45-49k, paid a realtor 7%, and made what?? Nothing much. Maybe 5,000, if I was lucky.
The buyers got a chance to own their own home, when no one else would give them a chance. They are delighted. The sellers made their profit and got out of the house before the winter set in. And I am still pinching myself because I can’t believe it was so EASY!
After being on CRE Online for almost two years, I have begun to fine tune my skills and have learned new tools to increase profits in my business. I look forward to the future and continued investing in real estate.