The Best Vacation I never Took
By Claude W. Diamond

"OH NO" !!! I exclaimed; it was the dreaded vacation time again. My better half had committed my daughter and I for a two week holiday in the wilds of Northwest New Jersey. Now don’t get me wrong, I think an occasional 2 or 3 days off is just great, but I have a problem if it gets any longer. I love my job as a real estate investor so much that anything that takes me away from creating deals for too long and I find myself considering a call to The Betty Ford Clinic for investor withdrawal. One way or another, I always find something to do 7 days a week creating good deals, so I concluded, "why not on vacation?"

My cookie cutter method (was Betty Crocker into Real Estate ?) as many of you know who have read my articles in "Creative Real Estate" is Lease Purchasing. I look for residential properties that are for rent or sale and make long term Rent to Own transactions. Then, I either Sublet the property to a Tenant/Buyer giving a generous rent credit or I Assign the contract to a third party investor. It is truly Win/Win for all parties concerned since no bank or outside financing is necessary at this point in the deal. All of the terms are determined in advance such as price, monthly rental and rent credit, closing costs and the length of the contract. I find that a high volume of deals can be made simply, profitably, quickly and profitably (it’s worth saying twice).

Back to the vacation: I made it to the fourth day without losing my mind and then I started to peruse the classifieds of the local newspapers. I got out my favorite Hi-Liter and began to circle the ads of the fortunate who needed conversion into the world of Lease Purchasing.

I usually start out with the homes, condos and yes, mobile homes for sale and then move on to the rental section. I will call FSBOS (For Sale By Owners) and certain realtor ads that catch my eye, i.e.: strong verbage such as Vacant, Moving, Divorced, Transferred, Lowest price or an out of state area code.

Much to my family’s amazement and my Father-in-Law’s apprehension of an enormous phone bill, I began my search for a good property with an owner who would consider a rent to own. I found one on the 12th call; a nice 3 Bedroom / 1 Bath cottage. It was an investment property that had been vacant for the last 6 months. The owners were motivated, but not desperate. I made an offer and we ended up with what follows:
Term: 2 Years
Price: $120 K
Rent: $725.00/Mo.
Rent Credit: $225.00/Mo.
Option Consideration: $725.00

The asking price originally was $135 K, but was dropped to $130 K and then $125 K when a realtor became involved. I negotiated a $120 K price locked in for two years.

I ran one of my magical ads to get the phone ringing. I only had 9 days left to find a Tenant/Buyer and close the deals, but I work well under pressure. (Isn’t that what vacations are for?!)

I found a nice couple who had been renting for what seemed like forever and who wanted to get into a home of their own. They had some minor credit problems, but I structured the deal for the full 24 months so they could get their finances in order so they would qualify when they applied for a loan. (They both held good jobs with sufficient income, all they needed was some time).

They paid me $3500.00 as Option Consideration and the rent was $825.00 per month with a $400.00 per month rent credit.

Claude Rule: Always be generous with your Tenant/Buyers, it will pay off in the long run.

My profit on this tidy little deal was as follows: $3500.00 Option Consideration (I received)
- 725.00 Option Consideration (I paid)
2775.00 Profit
+ 2400.00 Rent surplus ($100.00 X 24 Months)
$5175.00 Net Profit !!!

The selling price to the Tenant/ Buyer was the original Market price of $135,000.00 which gave me a $15 K spread to work with. Keep in mind that they will benefit from any appreciation over the next two years. This also gives me an additional $1900.00 profit at the close when they buy.

Everyone won in this transaction including yours truly. No wonder Lease Purchasing is called SMART REAL ESTATE !!!

The entire deal closed on the 12th day of my (ahem) vacation. I love Real Estate. How many people are truly fortunate to do something they love, make money at it and profit on their vacation?

For our next vacation, my wife’s plans include going someplace where they don’t have telephones .........................., but I bet they have Real Estate!