Millionaire in the Making – Jeffrey Weiller

YEAH BABY!!! Three cheers for Ron LeGrand & Eagle VAs’, Christine Nash. I would never have done this without them….

I just closed a $25k profit deal with no skin in the game. Today’s $15k up-front check is attached plus $10k on cash-out financing that a wholesaler threw away because it wasn’t cheap enough.

I insisted the owner put the property in a trust at closing to avoid probate and messing up the deal if owner died; memorandums and affidavits of trust deed into trust note mortgage purchase option and lease all recorded today…

We closed with an attorney over a 2.5 hour dinner because older owner wouldn’t travel 1 hour to his office.

Here’s the Deal…

Fact Pattern: Yellow Letter Mailing Out of town owners, but collided with a young wholesaler friend of mine who could not sell this to a rehabber due to mortgage — he also refers these types of deals to me.

Probate property – 74 year old woman inherited the property from her brother and had cosigned a $140,000 mortgage with a payment of $1245 per month PITI.
Town: Tough urban CT town in a C minus neighborhood. Owners of CTREIA won’t go near it.

As-Is Value: $150,000

Cost To Sell Valuation: $120,000

Owner Motivation: Payoff principal outstanding balance on note of $100K and recover the $50K sunk into the property. She needs to net $150K and not evict anymore bad tenants. She’d previously failed selling via 2 traditional brokers.

Property is a 3 bedroom, 1 bath, 1957 ranch-style with hardwood floors and walk-out basement converted into a full 1 bedroom in-law apartment that rents for $800 per month. Has 1970’s finishes throughout.

Solution: Purchase Option $150,000 with 5 years for $10 note and lease the property for 5 years at mortgage payment of $1245 per month with no payments due until I found a renter for the house.

I put it under contract 4-21-2015, and turned down a lot of dirt bags and hunted for the right people.

Closed today.

Found a lease option buyer who makes $5K per month on the books. He’s been with a Fortune 10 company for 22 years.
His first wife died of cancer and caused financial problems from death, but remarried and got back on his feet. His new wife makes $2K per month off books.

They Lease Option the house for $15,000 option fee (the couple only had $11,000, but went and borrowed from mother-in-law another $5K and ultimately put together $19,000. Of which, we got $15,000 and $1,600 first month’s rent leaving them with a $2,400 cushion.

Terms are $1,600 per month and $175,000 purchase price for 3 years, and after year 1, rent goes up 10% per year and price goes up 1% per month pursuant to attorney docs.

The couple put $1,600 first month’s rent to take the property off the market while we credit checked and verified income.

Today, I allowed the deal to be made directly with owner in consideration for surrendering my purchase option for 5 years at $150k and my lease for 5 years at $1,245 monthly.

I was paid $15,000 at closing and also received a note and mortgage on the property for $10,000 which in total covers the difference between my purchase option of $150k and the PTHO purchase option of $175k…plus any increases in the price paid pursuant to the option are added to my note if the buyer has not gotten a mortgage and cashed out within 12 months.

The in-law apartment which rents for $800 per month will bring in $9,600 per year in income allowing time for prep for renting and leasing. Two and a half years of rent is $24,000/15,000 down payment is a 160% return or 64% per year, so they win even if they don’t finance out.

When they do finance out which we anticipate within 12 months, their payment will drop to about $1,200 PITI less $800 per month from the apartment and is a $400 monthly housing cost.