| |
$25,000 on a “Subject To” Deal in 30 Days
by Bill Guerra (Bill in Vegas)
Purchasing a house Subject To,
simply put means buying a house from a motivated seller,
in which you take over there payments. You pay the
lender directly. It’s a great way to help sellers who
need to sell quickly. It is totally legal; every HUD-1
closing statement has a place asking if the home is
purchased subject to! I studied on how to buy subject to
properties and got started. I was able to complete a
fantastic real estate deal within 30 days using the
principles I learned from my research.
Early in my investing
career, I bought a house sub to
for $200k. After putting it under contract and getting
the deed (just as the course recommended), I was
immediately able to obtain and control the house to
hold, sell, or do whatever I wished with it. That is the
beauty of investing
, isn’t it?
The seller had a first mortgage for 170k and a second
home equity line for 28k. I’m not kidding—she was giving
me a lovely 1200 sq ft. home with a pool and two-car
garage. The whole place was in immaculate condition—I
mean wonderful drapes, tile floors, marble countertops,
and black sharp appliances—the works! Her motivation was
simple: to move down south to be with her sister. She
did not want to list it in the MLS, she did not want to
wait and hope that it was sold, she wanted it gone
quickly. However, after she secured a second note, the
equity in the house was used up and thus she could not
afford a realtor, closing and holding costs.
The home was in mint condition and I got it for
practically nothing. In fact, I used an earnest money of
$10.00! “Ms. Seller,” I told here “it doesn’t matter as
you are getting all your money in a few days anyway” is
the rationale I regularly use for the small earnest
deposit. I really wanted to give her something for her
cooperation, just not out of my pocket! I discovered
that the home equity loan held a remaining balance to
draw on of 2k. I told her to take the balance left on
the equity line for moving expenses. She did and felt
really good about it. Of course, then I felt good.
Win-win! The seller had expected no money initially, so
this was real treat for her. Plus, I was always taught
to give seller’s some cash if at all possible. It just
leaves a good feeling about doing business with me.
Originally, I was going to rent the house. The problem
is that in Vegas, you’ve got to get them real cheap to
have cash flow, because several investors have bought
and held properties here. Then I thought about
advertising it as a lease option. I finally decided to
sell it. I had made a large metal realtor-style sign. I
placed the sign out front, just in case a good buyer
drove by.
Sure enough, a buyer soon called and wanted to buy.
Better yet, he could close after a week with cash! His
father was taking out a home equity loan on his
residence in California. After two weeks, the house
closed for a sales price of 227k.Thus, my gross profit
was about 25k in one month. Not too bad for this new
investor.
This is how the numbers worked out:
| $200k |
My purchase price (first loan and home equity loan) |
| $2k |
Holding and repairs |
| $227k |
Selling price |
If I can do it so can you, trust
me. However it takes buying the right courses, then
studying them regularly. Fear, every investor has fear
until they get the hang of what they are doing. This is
my formula for overcoming new investor (newbie) fears:
Increase your education to decrease your fear. Its
pretty simple advice, yet works like a charm. See you
out in the field.
Bill Guerra (Bill in Vegas)
www.WillBuyAnyHouse.com
|
