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No Down Payment
No Down Payment
by Carleton Sheets






Article by Carleton Sheets

Cash at Closing.
A close-up look at ways to get cash back at closing

  Tim and Roy Stitely, an enthusiastic father-and-son team from the Washington, D.C. area, have their buying formula down pat. They don't close a deal unless they walk away with cash - a lot of cash - in their pockets.

  The Stitelys buy property from an investor who renovates row houses and quickly flips them for a modest profit. In addition to the amount the investor pockets at the end of closing, he pays the Stitelys a $5,000 rebate as well as $5,000 for closing costs.

  For example, in one transaction, the Stitelys borrowed $39,000 from the bank for a property appraised at $50,700. The contract specified that the investor receive $29,000 and the Stitelys receive $5,000 cash and $5,000 toward closing costs.

  That means a quick profit for the seller, who picks up the fixer-uppers for between $5,000 and $15,000.

  For the Stitelys, it means cash back at closing - and it's a lot easier to do than you might think. "It gets the deal done for the seller, and we actually come out with $5,000," says Tim.

  Negotiate with sellers

  There are a number of ways buyers can leave the closing table with more money than they walked in with. The two critical ingredients are these: finding the right sellers and not being afraid to negotiate for cash back.

  If you think the sellers might entertain a cash-back offer in order to move their property, then ask. All they can do is say no.

  For example, you could offer to buy a $100,000 property that needs $10,000 work if the seller rebates you the $10,000 at closing. Often the work won't cost as much as anticipated, and you can keep the difference.

  One investor included in her offer a provision for $1,000 cash back from the seller to cover unspecified "one-time non-recurring costs." The seller was happy to agree to the provision in order to clinch the deal. The buyer wisely avoided some of the anticipated repair costs and was able to keep the amount not spent.

  Very motivated sellers - those just a step away from foreclosure, for example - may flat out pay you to buy their property, especially if they have little equity in it. In such cases, you could offer to buy it for the amount of the mortgage and have them pay all closing costs. It could be worth it to the seller to get out from under a problem. Remember - the key to making a successful play for cash at closing is to ask. Negotiating with motivated sellers could mean money in your pocket.



  This article is sponsored by CarletonSheets.com, official home of Carleton Sheets NO DOWN PAYMENT™ Real Estate Investing . Advertised on TV for nearly 20 years and already known to millions, the Carleton Sheets™ NO DOWN PAYMENT Real Estate Course has helped thousands of people achieve financial independence.

   © 2004 Professional Education Institute. All rights reserved.



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