1st Deal Down - No Money Down

[Jimmy Delcamp]

I find that it is only helpful if I post things that people can learn from, so here is how my first deal went down. (For the newbies that need inspiration)

Over the past few weeks since I started getting into investing, all I had been doing was reading, studying, and learning. I knew that ll these things that the guru's were preaching had to work. And yet I still sat on my behind and did nothing.

I concerned myself with tedious tasks that weren't getting anything real accomplished. That's when a few nights ago I figured out the only things stopping me from doing it was me! I figured nothing would ever change if I continued to sit around, so I took the leap.

Thursday June 03 -
I got a list of twenty For Rent ads and compiled the numbers on a separate sheet of paper. Then I went down the list, one by one. Calling and asking anyone that would be willing to do a Lease-Option. Out of the 8 that I called - 4 didn't answer, 1 call-back, and 3 appointments. So I stopped here with these three leads.

Friday June 04 -
One owner cancelled, one didn't call me back, and I met with the last one that I met with to see their house. The house was alright, but not for my criteria.
Later in the day I replied to a couple that had sent me an e-mail last week in reply to an ad I posted on craigslist. They were more than willing to meet with me to discuss the Lease-Option.

Saturday June 05 -
I met with the couple and found out what their motivation was for selling. Then I asked what I could do for them that would help them out as fast as possible. From here I found out that they were financially comfy and just wanted to move to a nearby town to be closer to their church. We finally came to an agreement that satisfied both our needs.

Here is the deal:

Purchase Price: $258,000
Option Payment: $7,400
Monthly Payment: $1850
Lease Term: 3-year

All of this was agreed to be paid in about a months time while I looked for a tenant/buyer and they have a chance to get packed up and out of the house.

Although the terms may not appear to be the greatest, the main objective was to show that it is possible with no money down. And I did just that.

Moral of the Story: Any new investors reading this, just know that it is possible. It's even much easier than you may think. But, there is one thing that is necessary . . . . you have to get from behind the books, the computer, the tv courses and you have to start taking actual action. Call sellers, go see homes, do whatever it takes to make it happen. Believe you me, if you don't get up and take action, nothing will happen.

Good Luck Out there!

"I'm not afraid of failing. I'm afraid of living a boring life." -Roy Edwards

[Jon Holdman]

Originally posted by Anthony Larson:

Sandwich lease options only work on-
-option spreads
-rent spreads
-backend exercise spreads

whatare these things

Option spread: You collect a large option fee from your tenant/buyer and pay the seller a small option fee. The spread is the difference, and you keep that.

Rent spread: In this example, Jimmy was going to pay $1850. I mentioned he would need at least $1950 or $2000. The difference is the spread. Also relevant is the rent credit spread. If the seller gives you, say half the rent as a credit to the purchase, $925 in this example, and you give the tenant buyer $200, then you're gaining $725 per month. You get that on the back end.

Exercise spread. You buy for $258K and sell for $269K. That $11K is yours.

Glad to see you bailed on this one, Jimmy. Finding bad deals is easy - just look on the MLS for as many as you want. Finding a good deal is considerably harder.