HOW I MADE $8,000 ON MY FIRST DEAL WITHOUT SPENDING ANY MONEY! (Because I didn’t have any!)
Hi, Lena, again. Since this is our first edition, I want to share with you my personal story of how I got started in real estate. So, about 5 years ago, I was newly divorced, unemployed, broke and disgusted. I wasn’t sure what I was going to do but I knew I had to find a way to solve my financial dilemma. So, I remember being online looking for a quick way to make some money and I stumbled across information about “wholesaling” real estate which I’d never heard of.
For those of you who aren’t familiar with it, wholesaling in real estate is finding a property for sale (usually one in need of repairs or distressed in some way), contacting the owner, negotiating a sale price that is (ideally) 30% or more below market value, getting the property under contract (you can do this without any money changing hands but we’ll discuss that later), then finding a buyer (typically an investor looking for these kind of houses) and selling the “contract” to the buyer for a higher price than what you put it under contract for. At closing, you make the difference between the amount you put it under contract for and what you sold the contract to the buyer for.
For instance, let’s say you put a house under contract for $60,000 but
the After Repair Value (ARV) is $100,000 for a house like that in that neighborhood. Let’s say you find a buyer interested in the home and you `assign’ the contract to him for $70,000. Then at closing, you make the difference between your contract price with seller and your assignment price to buyer. You walk out with $10,000! And, all you really did was put a seller and buyer together, and NO, this is not the same as being an agent and NO, you don’t have to have a license for this! (I’ll explain the difference between this and being an agent in a later edition.) However, this is basically it in a nutshell.
I couldn’t believe how simple it was once I delved further into it. Is there a learning curve involved? Definitely. You will have to educate yourself to know what to do at each stage but we will help you with that in the next few editions.
But getting back to my personal story, once I learned more about it and felt confident to go out to do my first deal, I went all in. I did everything I had read about to do to look for my first property. I definitely learned by trial and error because the first couple of properties I went after didn’t work. (That happens when you’re new but I was determined.) But then I found one that did work!
I finally got a house under contract, then I had 45 days to find a buyer. I, once again, did all the things I had read about that I should do to find a buyer and eventually I found one!
The house was in a working class neighborhood but needed a lot of work. I was able to get it under contract for $12,000 (like I said, it needed a lot of work) and sold it to my buyer for $20,000. I made $8,000 but you would have thought it was $80,000! I was so HAPPY! Not only did it help me to turn things around financially, but it taught me that I didn’t have to wait on somebody to give me a job — that I had options. I decided that day that I would never be a slave to another job and so far, I’ve able to honor that commitment to myself. Now, I’m not telling people to go out and quit their jobs. I just want to present options, so whether you just want to supplement what you’re already making, or if you want to eventually make enough to replace your income so you can have the choice to work or not, I hope this information can help you. So, in coming editions, we will delve deeper into these options which I hope will arm you with what you need to Rock the Real Estate!