LET YOUR NEIGHBOR FINANCE YOUR NEXT REAL ESTATE DEAL!!

Back in 1999, I received a call from a gentleman in New Mexico.

"I hear you buy houses," he said.

Well maybe," I replied. "Whatcha got?"

He proceeded to tell me that he and his wife had temporarily moved to New Mexico three years before with the intent of moving back of Oregon at some point. However, sunshine had won out over rain, so they were staying.

"Problem is we still got this house up there and we need to get rid of it," he said.

He told me this house had been in the family for four generations and while it had sentimental value, he needed money for his new business. He knew it was old and run down but he would take whatever he could get. (Is this a motivated seller or what?)

I told him I'd take a look at it and get back to him.

I had some time that afternoon so I drove out to the house.

WOW!!

What a mess! This house wasn't a FIX-UP it was what I call a BLOW-UP.

Over 100 years old, vacant for some time, animals living inside with all the lovely presents they leave, 20' diameter hole in the kitchen where some one had started a fire, water damage everywhere, missing doors and windows, and many leaks in the roof.

Order some dynamite and let's get rid of this sucker!!

However, there was one redeeming quality I spotted.

A BIG lot.

Yahoo!!!

I LOVE big lots in nice neighborhoods, which this was. A quick check online told me this was a 12,000+ square foot lot and we could build two houses on it. Now we're talkin'.

I called my new best friend in New Mexico and told asked him if he was aware of the sad condition of his house. He said he was, as his neighbor had sent down some pictures. I told him I wasn't quite sure what I could do with the property and I'd like for him to sell me an "option contract" to buy the property.

Since he did not know what an option contract was I explained that this would be an agreement between him and I that would give me the right to buy the property (but not the obligation) for a fixed period of time for a fixed price. We decided that the fixed period of time would be two months, the price would be $82,500 and I would pay him $250 for this contract. That afternoon I drew up the contract and mailed it to him with my check for $250.

The next Sunday I ran this ad in the paper;

"FIXER-UPPER, 2 bdr, 1 ba, 941 sq. ft, 12,800 sq. ft. lot. $104,950, call Ron."

Well, guess what?? The first guy who looked at it, bought it . . . full price. I exercised my option, paid my friend in New Mexico and had a nice little payday for myself.

Let's look at the results of this deal. The guy in New Mexico got what he wanted, the buyer, who turned out to be builder, got what he wanted, two buildable lots at a good price and I got a nice little check for putting everything together. That's a win, win, win.

But here's the good part. My phone kept ringing all week with interested folks and here's what I said.

"No that one's sold, but if I could find another one for you would you be interested?"

Guess what 27 people told me?

"Would you take my name and phone number and call me when you find the next one?"

Now what have I got?

Twenty seven people with interest and money. Actually, I later found out that some were just what I call "tire kickers" and really didn't have money but there were plenty there who did. From then on, this became my pool of what I call "investors." My neighbors are my investors.

So now I have people who want to buy real estate and they have money. No more banks, no more hard money lenders, no more mortgage companies and best of all, no more paper work by the ton.

Let me tell you a little about what they do. A retired fireman, a school teacher, a minister, a mortgage broker, a retired small business owner. Do you see a common thread here? These are just regular folks that have a little cash or some equity in their home that they can access quickly.

Do you think you might be able to find some of these same types of folks that can provide the financing for your next Real Estate deal? I'll guarantee you can. Just ask around. They're everywhere . . . they're your neighbors!

Ron Mead has been a Real Estate Investor for the past 26 years. For a free six part series on Probate Real Estate, visit www.BuyProbateProperty.com.