My Third Real Estate Investing Deal Another True Nothing Down Deal.
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
My Third Real Estate Investing Deal: Another True Nothing Down Success
Overview
David Neese, a seasoned real estate investor from Memphis, TN, offers insights into his third investment deal, accomplished with minimal upfront costs. For those interested in jump-starting their real estate journey, David provides a free e-course available via email and tele-clinic at [FreeRealEstateInvestingCourses.com](http://www.FreeRealEstateInvestingCourses.com) and [RealEstateTeleClinic.com](http://www.RealEstateTeleClinic.com).
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The Deal
In my third real estate venture, I successfully acquired a property with almost no money out of my own pocket. The house, only 14 months old and in great condition, was in a neighborhood where new constructions made selling a pre-owned home challenging. The seller's unique motivation was personal; he wanted to move on from the house he had bought to share with his ex-girlfriend. After trying unsuccessfully to sell for months, he contacted me through an online lead site.
The Strategy
Recognizing that the area wasn't ideal for retail sales due to overbuilding, I proposed a lease option to the seller. Although typically not appealing, given his small equity and lack of need for immediate cash, this option suited him. After a month, the seller agreed, and we finalized the terms with a purchase price of $125k and rental payments set at $1,038. Other neighborhood homes were priced at $145k, making this a fair deal. I committed to starting rental payments once I secured a tenant-buyer.
Execution
I invested in a local newspaper ad, which was my only initial expense. It attracted several interested candidates, and I chose the best applicant after reviewing applications. We established a $3,500 non-refundable option fee toward a future purchase price of $149k, with a $1,250 monthly rent, including a $100 credit for timely payments over a two-year agreement. All necessary documents, including purchase and sales agreements, lease agreements, and disclosures, were duly signed.
Outcomes
This arrangement offers promising prospects. The tenant-buyer is reliable and likely to qualify for a mortgage within the agreed 24 months, presenting a 50% chance of purchase upon option expiration. Initially, I received a non-refundable $3,500, untaxed until the option is exercised, alongside a $212 monthly rent profit. Projected profits could reach approximately $30k when the tenant-buyer refinances and finalizes the purchase.
Lessons Learned
A misstep in this deal was agreeing to pay the rent directly to the seller instead of the lender. Despite this, the deal remains strong, generating good cash flow. Should this tenant not proceed with the purchase, the property's desirability would likely allow for a new tenant-buyer and additional option fee collection.
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This real estate journey highlights the effectiveness of strategic lease options and the potential for significant profit with minimal financial input.
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