Have I got a story for you . . .
I was having lunch yesterday with a couple local investors (good friends of mine at Charleston Home Buyers) and have an incredible deal to tell you about that they just closed on. And the first thing that was said to me was, “Thanks!”
They said one of the ideas that he recently got from the blog was a huge contributing factor to how he negotiated the deal. Here’s the idea that made the difference for him . . .
“Don’t Think for Other People!”
Check out the article, “The Most Costly Mistake You’ll Ever Make as a Creative Real Estate Investor,” if you haven’t already.
By using this idea, he not only got price and terms . . . but also TVs! He used one of the 7 ways to turn a good deal into a great deal by getting “the stuff” . . . two flat screen TVs! But I will say this, the deal was already great with the the price and terms he negotiated. The flat screens were just the icing on the cake.
How They Negotiated Price, Terms, and TVs
When the lead came in, the biggest thing that caught their eye was the fact that the property was free and clear. There are so many options as a creative real estate investor when you come across properties that either have a ton of equity or are free and clear. This is where your creative deal structuring skills come in handy.
The seller was asking around $200K initially, which was a turn off being that the property’s ARV (after repaired value) was only around $180K, but it was free and clear so they had to at least look into it. It also needed around $10K to $15K in repairs to be in excellent condition.
After taking the seller through the cost to sell worksheet and asking good questions like:
= > If we were able to pay you a little more for your property by paying you over time, would that work for you?
= > What do you plan on using the proceeds of the sale for?
= > How much cash do you NEED (or have to have) at closing?
= > What kind of monthly payment would you NEED based on your financial situation?
The property was contracted for $100,000. So they bought it for around 60% of value . . . great deal so far! But the real value in how the deal was structured was in the terms that were negotiated.
Once you come to a price that will work for a seller, it’s time to go to work on the terms. In this case, this refers to how the $100K would be paid to the seller.
After going back and forth, they agreed on giving the seller $25K at closing and then $1,250/mo until the $75K balance is paid in full. That’s what I’m talking about!
You may not have realized it, but that’s a 0% loan. In other words, every payment made to the seller goes 100% towards the principal balance! That means they’ll have the house paid off in under 6 years and from there . . . nothing but cash flow! Every rent check that comes in goes in their pocket.
And you know why the seller threw in the TVs with the deal (not to mention the washer and dryer as well). One simple reason. Because they asked for it.
They could have thought to themselves when making the offer, “Oh, the seller would never accept that low of an offer” or “There’s no way I could get those terms” or “The seller will definitely be taking those nice flat screen TVs.” But, they didn’t think for the seller and scored an awesome deal.
That’s how you build massive wealth in this business!
Gotta love it . . . price, terms and TVs!