Go To: Home > Tips & Strategies > Tip 12

by Jeff Beaubien

This is such a fast and easy way to add $20,000 to your balance sheet, I'm surprised it's not being done by every free person in this great country of ours. Since you may be skeptical, I am going to use a real-world example of how I accomplished this exact feat recently.

NOTE: This technique requires that you be pre-qualified for a mortgage.

"...about to be foreclosed upon."

I received a phone call from one of my realtors, Cindy. She told me that an agent in her office had just listed a home that morning and that the sellers were about to be foreclosed upon. Within 30 minutes of her phone call, Cindy and I went out to see the home.

It wasn't anything fancy, a 3-bedroom, 1-bath ranch with a 2 car attached garage. The sellers were asking $89,000 - about $5,000 less than what the home was actually worth. This is what's know as a "cookie-cutter" house in my neck of the woods.

I made an offer on the house that looked like this...

$85,000 with $1,640 back at close for improvements (which I will actually use to help offset the down payment on the home). The sellers accepted my offer without hesitation so we arranged for a closing date in three weeks.

While I waited for the closing date to arrive, I ran a classified ad in my local newspaper which read...

"Don't Rent. Why Rent? Rent-to-Own! $4,995 down and $995 per month."

When the ad came out I had over forty calls on the house!

I couldn't possibly find the time to show the home to all of these people so I let them drive by and peek in the windows. I got a phone call from a potential tenant/buyer who said that she wanted the house, no questions asked (a motivated buyer?).

She agreed to my terms so I pre-qualified her. To my delight, she was an acceptable risk. We closed the deal the next day...

Downpayment: $4,995 (first months rent plus $4,000 option deposit)
Rent: $995 per month
Rent credit: $100 per month
Term: 1 year
Sales price: $119,900

Remember, when you are offering such a tremendous value, you are entitled to receive a premium price. Since my tenant/buyer was receiving a tremendous value (a fast rate of equity accumulation and a very small down payment to buy a home), she was more than happy to agree to my high sales price.

Also remember that there are many different reasons that make potential buyers not qualify for a conventional mortgage which makes a Lease 2 Purchase deal very appealing to them.

"-- done deal!"

I closed on the purchase of the home and used the $4,995 which my tenant/buyer gave me plus the $1,640 for improvements to help offset my out of pocket cash at close. I then gave the keys to my new tenant/buyer -- done deal!

Let's look at the numbers...

I paid $83,360 ($85,000 - $1,640) for the home and my total monthly payments are $845. I am receiving $995/month in rent for a positive monthly cash flow of $150 and I have a written sales agreement to sell the house to my tenant/buyer for $119,900 in 1 year.

And that is how I added over $20,000 to my balance sheet quickly and easily.

UPDATE

My tenant buyer called me recently. She is approved for a mortgage and wants to buy the home right now -- just two months into our agreement. Yes!

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