My name is Jared Howe. I have been investing in Real Estate since 1986. I have learned through the years to be creative. Once you understand the fundamentals of how real estate works, there are unlimited possibilities before you.

I and another investor friend were out to lunch one day in Kansas City, Kansas and we drove past a vacant house at 1708 Nebraska Avenue. It had a Coldwell Banker sign in the yard with the Listing Sales Agents name. I wrote down the information, stopped to look in all the windows and walked around the house.

I contacted the listing agent the next day. I inquired as to the ownership of the house. She told me it was Bank Owned by Citicorp. I inquired how long they owned the property. She told me 3 years. (Now this was long before the REO glut of houses today). I then asked how long has her listing been on the house and if any offers had been made. She told me she had it listed for almost 1 year. Also that it was previously listed with RE-MAX for the previous 2 years. She also said NO offers had been made on the house.

I asked if the house was with the St. Louis divisional office of Citicorp. The listing agent said yes, and was surprised that I knew that information. I told her I had purchased many REO's in the past and that I knew of the Citicorp office in St. Louis. I then asked what the asking price for the house was. The Realtor told me $33,900.00. I asked how the price was based and she told me by an appraisal. I then told her I would be coming in with two offers in the morning. She said “great”, and we agreed to meet at 10 am the following day in her office.

I sat down and put together two simple offers. Now I always go low. I can always come up in price offered if necessary, but in general I go low. My reputation isn't at risk, only my pocket book. The first offer was for $17,500.00, with $1,000.00 down and Citicorp financing me on the balance of $16,500.00 amortized over 30 years with a 5 year balloon. The second offer was for $10,000.00 all cash. I handed both offers to the listing agent and you could see the wind going out of her sails…. She smiled at me and said, “Mr. Howe, Citicorp will never accept either of these offers. They are way too low”. (Now, I wish I had a quarter for every agent who told me they won't accept that offer only to have it accepted…)

I told the listing agent to go ahead and submit the offers anyway. I could see she was hesitant to do so, and to insure the offers were submitted, I wrote at the bottom of both offers under additional terms and conditions, “Buyer reserves the right to accompany broker/sales agent to present offer”. I insured that the offer would be submitted because I would be there when it was. I always put this in my contract offer. I then tell the listing agent or broker, that I am not there to circumvent their job or commission. I am there to answer any questions the seller has that the agent or broker cannot answer for the seller. This always works for me.

So, the following day, I got a call from the listing agent. She was going to call Citicorp and submit my two offers, and would I like to attend? She called me because the contract said I had the right to be there remember?) I told her yes and drove over to her office. We went over my offers again and I sat at the table while she called, and remained silent. She explained my two offers and received a question from Citi… How soon could I close on the cash offer? I told the Realtor, we could close in Coldwell Bankers office as soon as they could send the paperwork and Deed. 24 hours if they FED-EX the paperwork and Deed.

Citicorp took offer number 2. All Cash, $10,000.00 dollars. The listing agent looked at me with the funniest grin and said… “If I'd had known they would have accepted an offer like that I'd have bought it myself”. Citicorp set the closing 3 days later in the office of Coldwell Banker, with a Title Agent from the Title Company next door. I didn't worry about the the title as it was a foreclosure and had been cleaned through the process when Citicorp took the house back. Now before I get into the meat of how I creatively did the deal, let me tell you a little about the house…

It was a three bedroom ranch, with a full basement and two car garage. The previous owner was an elderly couple. The husband must have been a brick layer by trade, because it had beautiful brick work along the driveway, front and back porch, a brick wall around the entire back yard, and a brick barbecue. The husband passed away, and the wife was in a nursing home. She passed and the house was left to their two sons in the will. The house was paid for with no mortgage on it. One son bought out the other for his half interest in the house. He then refinanced the house with Citicorp, and never paid the loan back. He walked away from the house. Citi foreclosed and took the house back.

Now, Citi as an incentive to sell the house, went in and completely painted the interior and exterior of the house and garage with fresh paint. All new carpet was put in every room except the bathroom and kitchen where new tile was put down. They also put in new appliances, a GE Washer and Dryer, Stove, Refridegerator, Micro-Wave, and Dishwasher. So, I knew the house was in great condition and a steal if I could get it for my price. Another thing I knew was the neighborhood, it was mixed and working class. One problem. Banks were redlining the area and people were buying further out of the city. So, I figured I would have to owner finance the property.

Now this is how I did the deal. (For me it was no money down).

I showed up at my branch bank and took out two Mastercard Credit Cards. I placed them on the counter with the teller and told her I would like a Cash Advance of $10,000.00, or $5,000.00 per card. The teller took my Drivers License and called Mastercard and got approval for the Cash Advance from each card. She came back and asked how I would like that, in Cash or Check? I told her I would like a Cashiers Check made out to CitiCorp for $10,000.00. She told me that would cost me $3.50. I reached in my pocket and handed her the $3.50 and walked out of the bank with the Cashier's Check for $10,000.00.

I arrived at the office of Coldwell Banker and met the closing agent and listing agent. We proceeded to close and I handed the check to them. Now in my contract I had Citi paying for closing costs and the Realtors commission. The closing agent pro-rated the taxes and insurance, and the cost to purchase the house was now $8,700.00. The closing agent deducted that amount from the $10,000.00 check and gave me back the $1,300.00 in a draft from the Title Company. I just got paid $1,300.00 at closing for buying the house.

CitiCorp made a whopping $5,300.00 on the house. The Realtor made $2,000.00 and the Title Company got paid $1,400.00. I walked out with $1,300.00 and Deed to the house. ( I called my insurance man and insured the house for $35,000.00 before I closed).

Now remember when I made the statement “Once you understand how real estate WORKS, you have unlimited possibilities”…… This is what I profited on the house and how I did the deal…

1. Used Credit Cards to get the $10,000.00 to purchase the house.
2. Insure the house before closing for value.
3. I then left the closing and drove to the house and went inside. I then called an appliance store that purchased used appliances. I told him I had several appliances I wanted to sell. He asked me how old they were and I told him they were all brand new and explained how they came with a house I just bought and I didn't need them. He came right over. Asking me how much I wanted for them I told him, make me an offer. He offered me $1,500.00 for everything and I said sold. Why haggle. It is all profit and greed is a terrible thing. He immediately handed me $1,500.00 in cash, and proceeded to move them to his truck. Now how much have I made on the house so far? $1,300.00 plus $1,500.00 equals $2,800.00. I made more than the listing agent and haven't even sold the house yet.
4. I place an advertisement in the Sunday Paper (Kansas City Star), “House for Sale by Owner, $35,000.00, $3,500.00 down, Owner Financing”. My phone rang off the hook.
5. I screened the callers and settled on one Gentleman. He grew up in the area and his mother still lived in his boyhood home 3 blocks away. He wanted the house. He worked for the Airlines and had $3,500.00 for his down payment. I met him at the house. He showed me pay stubs and had 9 years on the job. We wrote up the contract right there on the spot. ( I already had the Contract for Deed drawn up the night before). He handed me his $3,500.00 and I handed him the keys to the house and garage.
6. I now held a Contract for Deed with the following terms. Sale Price $35,000,00., with 10% down. Balance of $31,500.00 amortized over 30 years with a 4 year balloon. (The buyer planned on hitting his Credit Union when the balloon came due). Now to look for a Note Broker.
7. I called up a local note broker I knew, and told him I had a contract for sale. I told him the terms, the down payment, and where the buyer worked etc. He told me he would shop my contract and call me back. He did call back two days later with a price for me. He had a note buyer willing to pay $22,450.00 for my $31,500.00 contract. I said sold. How soon can we close. The note broker told me 3 weeks. I said fine. See you then.
8. I show up at the closing with the Title Company. A Check is waiting for me in the amount of $22,450.00. My share of the closing costs was, $800.00. That left me with $21,650.00. The house is gone and out of my hair. I have no worryies. The buyer now makes his payments to the Note Buyer.
9. I then call Mastercard from the Title Company to find out how much is owed on my 3 week and 2 day cash advance on the $10,000.00. They tell me interest is $872.00 so far. I then have the title company cut me two checks, One for $10,872.00 for Mastercard which I mailed out that day, and the other for $10,728.00. My profit from the note sale after returning the borrowed $10,000.00 plus interest.
10. Now we add in the following:

• $1,300.00 from the purchase closing at Coldwell Banker.
• $1,500.00 I got for the appliances.
• $3,500.00 I got for the down payment from my house buyer
• $10,728.00
• This totals… $17,028.00.

This is 3 times what Citicorp made on the house and over 8 times what the Realtor made…. all because I was creative and knew how real estate works, and knew what to do with that vacant house.

Of all the deals I have done over the years in both Residential and Commercial, Buying Tax Liens and Tax Deeds, Mortgages… etc…. This is one of my favorites… It was quick, sweet, and profitable. Next time you see a vacant house… check it out!

Jared Howe
Nevada