I long ago lost count of the number of people who tell me they know they could succeed in real estate investing if they “just had the money to get started.” This week’s case study, which focuses on a deal in progress that we will track from its start to finish, is a demonstration of why you should not let money (or the lack of it) get in the way of your real estate investing success. There is almost always a creative way to get a property under contract so that you can use it to generate amazing returns if you will just take the time to really look closely at the situation.

There is nearly always a creative way to get a property under contract so that you can use it to generate amazing returns.”

The property we will discuss today is a fix-and-flip deal that is located in Onaway, Michigan. I got it under contract for $40,000, and I expect it to sell for about three times that once I have it fixed up. However, I knew that I did not want to pay the entire $40,000 up front on the property because I have a few other deals going as well right now. I wanted to keep some of my capital liquid! To that end, I talked to the owner of the property about my preferences for this purchase. Not surprisingly, he told me he was selling, in part, because he needed some liquidity of his own. After discussing his needs and mine, we came to an agreement: I would pay half of the purchase price ($20,000) up front, then pay the other $20,000 on the other end when I sell the property and complete the flip.

This is a great solution because it loosens up the pressure on me as I fix up the property because I will not have such a large payment into it up front. I will be better able to do the best repairs as fast as possible rather than hurrying too much and getting things potentially done wrong. It is a great solution for my seller because I was able to close quickly so he could get the liquidity he needs on his end as well.

Of course, the only factor in the success of this fix-and-flip deal is not getting the property under contract, although that is important. I also had to estimate the amount of money I would need to put into repairs. It looks like it will only need about $30,000 in repairs, which is a great opportunity, and I’m looking forward to a relatively quickly transaction.

How I Found This Flip

You can’t flip houses if you can’t find houses to flip! That makes lead generation one of the most important facets of real estate investing. I found this deal by putting the word out that I was looking for a property to flip. Here are the people I targeted with this message:

• real estate agents (I notified a specific Onaway agent I work with a lot and who knows what I usually am looking for)
• local property owners who have multiple homes in the area
• local investors who do flips themselves

That last population, local investors, is crucial to success. Lots of “newbies” think that local investors are competition, but usually they are your best unofficial team members! That is why I founded the Old School Real Estate Investing & Strategy Session Meetup, and we have our second meeting tonight in Mackinaw City, Michigan! Click the link to sign up to attend and join our meetup group. We can’t wait to see you there, and, until then, remember to keep it Old School!

Ask questions about this flip in the comments below.

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