Posted by Kathy F. on December 27, 2000 at 03:14:32:
I haven’t yet bought any of these programs. I’ve only just finally discovered this message board and site, and am very excited. What really jazzed me about this concept of REI was what happened to us – or, better, what we made happen with help from above – this year. We had five children and discovered I was pregnant unexpectedly with twins. Our house was too small for seven children, and we were beginning to really hate our neighborhood and the poor influences there on our kids. But our credit was totally shot after my dh began his own business – too much famine income and not enough feasting to cover the bills on time. We thought it was impossible to move, impossible to buy. But we discovered by happenstance just such a situation Rob described to you. Some friends were moving out of their rental into a home they had had built. In talking with the wife I learned that they had entered and aborted negotiations with the owner of the rental. The owner was willing to sell, but only on his terms – he wanted to carry the loan for five years and then get a balloon payment after that. The house was just right for our needs after making a few small structural changes (enclosing a back patio and dividing a 22 ft living room into a 4th bedroom and home office). We were already working on repairing our credit and had set some short and long-term goals toward that end, and that 5 yr plan with the balloon payment at the end worked in our favor.
The day my friends moved out I called the owner and asked if he was still interested in selling his house ON THE SAME TERMS he offered to the previous tenants. I made it plain to him that I knew exactly what those terms were – they were great for this year, but had been a bit steep the 1 1/2 years before when my friends were discussing the purchase. I wanted this house on those old terms, and he gave it to us that way. So now we are living in a 2700 sq ft home which we purchased for 1/3 + less than the homes in our new neighborhood are selling for. Our seller also didn’t want a big down payment – he didn’t want that much income to declare on his taxes – so our down was 5%, rather than the conventional 10 or 20%. Not only that, he never checked our credit or our income. He was in a win/win situation no matter what, so those things didn’t matter. If we defaulted, the house would revert back to him. If we didn’t default he was getting his “rent” income without the hassle of ownership/repairs, etc. We got a house that was nearly twice the size of our old one in a prestigious neighborhood. No matter how much money we might put into improvements on this house, we will recoup it and then some if and when we ever sell. Our new neighbors are thrilled because they considered our house a blight on the neighborhood, and are just glad to see owners living in it and improving it. So we sold our old home in order to have the money to buy this new one.
It was this transaction that has me so excited. I finally have realized the enormous income that can be generated through real estate. We bought our house in 96 with $5,000 down (borrowed). We sold it in '00 for $30,000 more than we paid for it, which gave us the money to pay our new owner his down and also to finance improvements as well as pay off other debts. That’s a lot of cash generated on borrowed money. Now we have a home that if we were to sell now, just 3 months after purchasing it, we would net at least - minimum - $25,000. More likely it would be close to $50,000 because of the neighborhood. As it is we had to insure just the house alone for $30,000 more than we paid for both it and the lot it sits on. From $5,000 4 1/2 years ago to $50,000 now – that amazing. And that’s just by doing the normal thing all Americans try to do - buy a “starter” home, then as the family gets bigger, buy a bigger home. What can happen by doing this type of thing over and over again? Wow! The potential’s amazing!
Of course, this is my dream home in a dream neighborhood and I have no intention of ever moving. But what I do want to do is find other properties like this one, buy cheap and sell well. First I have to learn the techniques while we rebuild our credit and work on saving some money. I also would like to get my newborn twins past their first year. But I’m living proof that owners are out there wanting to unload property, and even we who have low incomes and bad credit can buy them and profit from them if we just stop believing it’s impossible, stop listening to the fears, and start realizing that WE FIND WHAT WE LOOK FOR! If we want to find success and are willing to put in the sweat equity, both literally and figuratively, well, we will find it! We just have to educate ourselves about how this is done, learn from the doers on this site, read the books, and then go for it when the opportunity presents itself. Because it will! We start looking for it, and it’s going to be there, staring us in the face. If life has taught me anything it’s taught me this – WE FIND WHAT WE LOOK FOR. Think about it. Study it. Then do it! I’m going to… again!