Hi there, it’s Rick Otton. I just got off the phone with a Go Direct Student who’s doing a transaction and I had a brilliant idea, you guys will love it.
He’s been contacted by a seller who has to go back to Australia. What a beautiful place! The seller said, “I need to sell my house.” And the student said, “What are you going to do if you can’t sell it?”
The seller said he guessed he would rent it for about £1,000/month. So the student asked if he’d be willing to consider a 5 year lease option. But the seller of course said no because 5 years is too long.
So I said that we need to reframe it. You don’t need 5 years, you just need 2 years. The seller will do 2 years.
He wants to rent it for £1,000/month so here’s what you do: Go back to him and say, “Here’s what I’ll do. I’ll rent it from you for £1,000/month whilst I’m getting the money organised to buy it. I know you want to sell it, and I’m happy to buy it. You want £200k, and I’ll pay the £1,000/month and the balance I’ll give you in 24 months.”
So now he’s buying this house, the guy is going to Australia, he said he’ll rent it for £1,000/month. My guy said he’ll rent it for the £1,000/month and he’ll clear out the balance of what’s left in 24 months.
The seller agreed! So now he’s getting his rent, and he’s getting the price for the property. Do you get it?
What my student is getting a 2 year interest free loan.
But here is the sexy part of the transaction: in 2 years time, he will have paid £24,000. He now turns around and does another lease option with a new buyer coming in who pays the £1,000/month. But the guy who’s coming in isn’t getting £1,000/month off the price, whereas my guy who’s paying the seller IS getting that monthly amount taken off the price.
So the money coming in is the same as the money going out, it’s just the money coming in isn’t coming off the price of the house.
The way we frame that up is by saying, “I’ll tell you what we’ll do, let me rent that house for £1,000/month so you’ve got money coming in. You’ve got certainty. I’ll give you the price, and I’ll clear out the rest of the price down the road as soon as I get the rest of the bank money in. The longest it will be is 24 months, so you don’t have to worry about it. In the meantime, I’ll look after all the repairs, you’ll get no vacancy, and you’re in the game.”
The seller says, “GREAT!”
Here’s the magic: work out the calculation in 24 months, the guy coming in has paid £24,000, my guy has paid £24,000, it’s the 5% deposit. So the guy who came in has paid a 5% deposit, so he can get a 95% bank loan and take my guy out. The buyer coming in tells the bank he’s paid his 5% deposit, the seller raises his hand and confirms he’s received the 5% deposit. The bank gives the buyer the other 95% for his home loan, and pays out my seller.
In the meantime, the buyer has to give the seller £24,000 less than the seller had asked for.
I know you may be thinking that was complicated if you have not done many of my strategies. But let me tell you this, if you rewatch this 5 or 6 times, you’ll get it! And once you get it, you’ll never go back to buying houses any other way.
That’s the fastest way I know to make £24,000 on 3 pieces of paper in an hour.
Catch you all soon!