by Dave Peniuk
Julie and I recently had the opportunity to attend Tony and Jo-Ann Peters: Creative Real Estate Investing Power Workshop….yes, that’s a mouthful, but for good reason! It was jam-packed with great strategies, advice, tips, resources, and a ton of great real examples! In this post, I am going to discuss just 2 of the many strategies one can use on the creative side of real estate investing.
2 of my favourite creative real estate tips: Long Closings and Free Stuff
While I had heard of both of these creative strategies from other real estate teachers/educators before, I really liked how Tony and Jo-Ann emphasized the win-win approach to using these strategies. Long Closings, for example, is based on the premise that you tie up a property that’s for sale but the Seller’s, for whatever reason, do not (or cannot) close and move out of the property for 6, 7, 8+ months.
My personal favourite and one that we have encountered quite a few times already through calls we have received from our yellow letter campaign, is where the Seller is currently building a new house but residing in the house they want to sell. Rather than sell it and move into a rental for 6-12 months, you suggest they reside in their home until they are ready to move into the new one they are building.
So, why do this as a Buyer? First, it gives you time to find either a Tenant (as a rental) or Tenant-Buyer (on a lease to own), flip it to another investor or even sell it to a new Buyer. It also gives you time to line up joint venture partners and financing if that is the route you are going to. And, the BIG bonus of a long closing is IF it’s in a warm (or even better – a HOT) market, the property may appreciate 5-10% or more during that time! Guess who gets the equity? You do! But, this generally works best in an appreciating market. If the market is flat or even worse, falling, then you could be stuck with a property that is now worth less than what you agreed to pay 9 months ago! So, make sure you do this ONLY in a market that is seeing appreciation!
Who doesn’t love free stuff? I tell you, if I could make a nickel every time I gave away free stuff (yes, then it wouldn’t be free would it? but you get the point!), I would be as rich as Donald Trump!
Basically this strategy is simply asking for something that you may want that is at the Seller’s house/property. For instance, perhaps the Sellers has a nice collector car, RV, motorcycle, or even lawn mower at their house. Why not ask for it as part of the purchase? If you can find out why the individual is selling (and where they are moving to – maybe they are downsizing into a condo?), then they likely may not need or want a lawn mower or even their nice collector car.
Sometimes there is even nice furniture that a Builder may have paid for to stage their showhome! Ask for it! We just did that very thing recently when negotiating with a Builder who needs to sell. We asked for the furniture and the Sales Agent said it likely will go. Remember, you won’t get if you don’t ask!
WHY would a Seller agree to a Long Closing or give you Free Stuff?
Again, it could be for any number of reasons. If they are building a house and the bank will only finance the construction if they sell (or have a firm Purchase and Sale Agreement in place) their current house – BINGO – this is an opportunity for the Seller to know their house will sell, the bank will finance the construction of their new house, AND they can continue to live in their current home (that they’re selling) without disrupting the family to move into a rental and then move again once the new house is built! See, win-win!
And including Free Stuff in the sale of their home can be a great win for the Seller too. For instance, as I mentioned if the Sellers are downsizing and don’t want to deal with doing a garage sale or fool around with placing ads to sell their car, motorcycle, shed, lawn mower, etc., then this is an easy alternative for them. There can, again, be any number of reasons why someone would give away Free Stuff, but they likely won’t UNLESS YOU ASK!!
So, a couple of great strategies that we “re-learned” while attending Tony and Jo-Ann Peters: Creative Real Estate Investing Power Workshop.
Remember, real estate investing can be fun and creative…not just buy, rent, sell, buy, rent, sell. If you have any other creative/interesting tips or strategies, please comment!