Hello again and welcome to what I call the grand finale of this amazing deal journey. If you’ve missed Part 1 and Part 2, stop right now and go catch up. You need the full effect of this crazy adventure.
So, I left off last time by talking about the mayhem that ensued surrounding what I now call the poop house. Yep, really. That bad. And I had started to figure out how to get out of this mess (literally and figuratively).
And now that I had settled with the seller of this property, it was time to work with the servicing company because we had a wrap mortgage in place. At this point, I learned a couple more things:
- There were closeout fees of about $700 – I had no idea. When you sign up with a servicing company, they say nothing about closing fees. All you know is that they charge $8/month. Then the surprise comes at the very end of the deal.
- Also, they are a pain to get the payoff from – especially if you are modifying the payoff. It took 2½ weeks to get one simple document, and I almost lost my buyer because of it.
I Wanted Out, Fast
Obviously, it was now time to figure out what to do with this property. So, here’s what we did…
I told my construction guys to go buy new doors and install them, and put up new drywall but with no finish.
I listed the property on the MLS for $124.9k as a modified wholesale deal. This is what is known as wholetailing, which is wholesaling to a retail buyer – not wholesaling to another investor. My hope was that I would find someone who might want to just finish it and fix it up themselves.
We had a buyer show up who was willing to put in $17k but was actually offering $120k. His offer was contingent on me finding him a lender who would extend a hard money loan.
After a lot of phone calls, I found a hard money lender who was willing to lend on the acquisition and was also willing to lend on the construction as well. Thank God for relationships with local lenders.
3rd important lesson: You have to have good, working relationships with local lenders. Continuously. Once again, I am SO thankful I had these important power team members in place.
I paid the lender and closed out the transaction. I was FREE of this property!
I ended up with a check for over $40k. As I considered this amazing payoff, the logical part of my brain said, “Be sensible, roll it into another deal.” But the other side of my brain said, “Do something fun – something spontaneous and crazy.”
Remember, by this time, several years had passed and I was no longer a greenhorn but had been successful in the business for a number of years now.
Here’s what I did: I drove to the Lamborghini dealership and said,
“I have $40k, can I buy that Lamborghini over there?”
They said they needed to talk to the leasing agent and work some numbers. I ended up getting it for $15k down and $2,400/month. Because it was a 2015 and the 2016s had come out, there was a deep discount on the full price.
I put the rest of my check into a special bank account, out of which I’m making these lease payments. I created an amortization table and found – because of that deep discount – I’m already right-side-up in this deal.
But know this…
Perception is important to me in my business. I don’t want people thinking I’m irresponsible or that I have to flash my wealth. While this car was a real gift to me, it was still a wise business purchase in every aspect. Here’s how…
I got an open-ended lease with no mileage restriction, plus it’s a write-off for my business. My plan is to drive this rocket ship for a couple of years and then sell it. (I know exactly where I’ll be in the lease when my money runs out and that’s when I’ll sell it.) The car will be worth more 2 years down the road than what I will owe. That means I’ll be able to drive it free – and have fun with it – for 2 years.
Believe me, it’s a great feeling to know that I can enjoy the real estate investor’s lifestyle, which for so long was nothing but a dream.
This journey, though, is actually still not over because I had one more amazing surprise in store for me.
I was unaware that when you own and drive super cars and speak their language, you become part of a new networking group.
I was invited, through the Lamborghini dealership, to an event that is open only to owners of super cars. They all show up and talk about cars. I attended the event and found myself talking business and building relationships with these people.
Think about the people who are at this event – wealthy business owners, smart professionals, entrepreneurs… the perfect place for a real estate investor to network.
And this just happened to come about at a point in my career when I am intentionally moving into the arena of doing million-dollar-plus deals. The value in these connections is of inestimable worth to me at this time. By default, I’ve become an insider. What better way to create relationships than in such a non-confrontational setting?!
Now I’m confident I made the right decision to lease the Lamborghini.
The Bottom Line
Looking back at this journey, several things come to mind.
- This was definitely a testimony to thinking outside-the-box for a creative wholesaling deal. My advice to newbies is that even if you don’t have all the details worked out, my story is proof that you can figure it out as you go.
- As you saw, much of my story centers around people skills – how to build and maintain rapport with the sellers and the tenant. I can tell you it was not easy to talk with that widow, to tell her the awful truth of what was going on, but I did it. And looking back, I’m so thankful I handled it with concern, care, and compassion. People skills are sooo important.
- Another important facet in the story is the need for being surrounded by a good power team – relationships with closing agents, attorneys, contractors and local lenders. I was especially thankful for a savvy closing agent in this situation.
- Somehow, I had the courage to actually celebrate this win in a way that was not common to me. Through the years, I’ve flipped a lot of houses and I’m responsible enough to pour my money back into the business. But sometimes you have to do something for yourself that makes you happy. When I leased that Lamborghini, I said, “This one’s for me.”
Keep it real.
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