My son often listens to the real estate investment deals that I have put together. He has grown up in the real estate arena. I am fondly reminded of the time that I was talking with some fellow investors. He intently listened as we told of different deals we had structured. Suddenly he chimed in “My dad bought a house for a dollar once!” I was proud that he was intrigued of this perceived fact. He was with me when I put a single family home under contract. As we negotiated, my son picked up on every detail. Although I did not actually buy a house for a dollar, I did put a dollar down as earnest money. This is as almost equally of an impressive feat among the “standard procedure” among us.
People get caught up in “standard” procedures. There are no laws that dictate what the earnest money should be. In fact earnest money does not even have to be money. However it is perfectly clear that it needs to be some form of consideration. Consideration can be something of value such as a vehicle, jewelry, or personal items. But even less common knowledge is that a handshake can be acceptable consideration. Although I prefer to place some form of money as my earnest money to help consummate the agreement and create more of a binding agreement, wherefore enters the dollar aforementioned.
What I love about real estate investing is the total ability to be as creative as you like. There are literally a hundred ways to structure a single deal. When you understand the dynamics of any given opportunity you are then able to see different ways to structure an offer to accommodate all parties’ needs. Your “job” as an investor is that of choreographer as well as coordinator. What do I mean by that? All deals must be Win/Win. They must work well for you the buyer, but at the same time work for the seller. You will find you make substantially more profitable transactions if you meet the needs of all parties in the agreement. If you learn to do this on a consistent basis your close rate will rise exponentially.
Just like my son learned that you do not need to place a large amount of money down to purchase a home, you can also learn the vast techniques of structuring a purchase agreement. Furthermore you may be pleasantly surprised to learn that there are many ways to purchase properties without cash or credit. You have to be willing to think outside of the box; to utilize an over used cliché. My favorite methods are Subject To financing and Owner financing. See my other articles for these topics. I love to hear critics say “you can’t really buy properties with no money down”. I rarely respond to them anymore. Besides who has time? I am on my way to buy yet another property without using my own money! Visit www.guaranteedmaximumreturns.com or www.woodgrovehomes.com email: [email protected] -Scott Woodhams