Fact: It doesn't take money to make money
Over and over I hear the same adage, “it takes money to make money.” This statement has been drilled into our heads from childbirth and instead of being questioned, it is accepted as fact. People cannot understand why anyone could sell anything for "no money". On November 6, 7th and 8th I am presenting a once-in-a-lifetime seminar about doing deals without money. It’s called The Art of a Deal. At this interactive event, you will experience a new way to think about structuring transactions. I'll show you various forms that “money” can take, other than cash.
Attend The Art of a Deal and you will no longer believe the lie that it takes money to make money. Instead, you will find no money deals all around you. Join me and my students and open your mind to the opportunities others miss.
The following is an example from my book, The Real Book of Real Estate, where my creative finance and exchange coach, Wayne Palmer, tells a story about a deal he completed using no money.
I became the new owner of a property through foreclosure. Following foreclosure, I discovered that the borrowers had left the home in poor condition. It was going to require significant work and expense on my part if I hoped to get the full value upon sale. I was holding what for me was a bitter lemon.
Before undertaking the rehab, I presented the home for exchange, priced at $225,000 and in “as-is” condition, at a local equity marketing meeting. That was a price I wasn’t confident I could soon command in the buy/sell market, even after fix up. A gentleman in attendance at the meeting said that he thought his daughter and son-in-law might be interested in the property. He offered to trade me two lots as a down payment on the home.
The first parcel was a luxury view lot located fifty miles north of my home in an older, but stable subdivision of good values. The problem was, it was so steep that we referred to it as the “billy goat” lot, since nothing but mountain goats could climb the embankment to the street. It required some special engineering to make the lot useable. Having had experience in construction, I wasn’t nervous about the geology of the parcel, but the seller was. I was more nervous about an empty horse property on which I was servicing a $150,000 mortgage. My vacancy didn’t bother him because his daughter was willing to occupy the property.
The second lot was zoned for a duplex and was close to home, but the subdivision in which it was located was conforming. That means that the county of jurisdiction had never fully approved the subdivision, so no building permit could be issued for any structure on the lot. Consequently, unless the county’s regulations could be satisfied, the lot was of little commercial value. It seemed to me that the problem was resolvable, given the investment of some time and perhaps some engineering work, which was necessary to prove to the county that the boundaries, placement of utilities, and drainage were all conforming to county standards. I also felt more comfortable with the duplex lot than with the empty house.
We structured a transaction wherein he traded the two lots to me for a combined value of $75,000, and his son-in-law secured a new mortgage for $150,000, meeting my asking price of $225,000 on the foreclosed home. The exchange became the sugar that turned my lemon into lemonade. Not long after we closed, I was approached by a young couple about buying the duplex lot. The husband worked in the county planning and zoning department and had an inside track to secure the needed variances. After the lot was approved for a building permit, the couple paid me $50,000 cash for it. I eventually sold the billy goat lot for $70,000. Consequently, by using an exchange I was able to get $120,000 for the equity in the foreclosed home that probably wasn’t immediately worth $75,000 in a cash sale. More sugar, more sweet tasting lemonade!
– Wayne Palmer from The Real Book of Real Estate
Join me and my advisors November 6-8, 2009 in Scottsdale, Arizona.
http://www.regonline.com/Checkin.asp?EventId=775900