Driving for Dollars

You never know what you are going to find when you are out driving for dollars.

Driving for dollars is the simple act of taking a different route to your destination the next time you are out and going somewhere, and utilizing that time to spot a vacant house that may be a good lead for you.

This practice has been used by real estate investors for decades, and it always turns up a lead to a property that NO ONE else knows about, because the lead may not be in Foreclosure, or listed on the MLS, or in Probate, or available as a hot lead on any database information source.

However, you can always count on the property being listed on the property appraiser’s website, with all the property’s ownership information, and also there will be deeds and mortgages that you will be able to view pertaining to the subject property that you can find in the Official Records Book.

So here’s the scoop of what made this deal different…

I spotted a vacant duplex near where I live in West Palm Beach, Florida that looked as though someone was rehabbing it, but then stopped before finishing the carpet and the landscaping.

I estimated that the property needed about $5k in repairs. After looking the surrounding properties for sale, I realized the After Repaired Value was about 100k.

I looked up the owner of the property on the property appraiser’s website and got the name of the owner. I tried to find the owner locally and on the internet, but couldn't.

So this is where this deal took a different turn…

I noticed in the official records that rather than a regular mortgage with a company like Citi, Bank of America, etc., this property had a private mortgage and the mortgage holder who loaned the money lives in California.

So I called the lender in California and asked him if he knew how I could get in touch with the owner of the property to whom he loaned the money. The private lender was 85-years-old and explained to me that the owner of the duplex (i) was a new investor, (ii) had run out of money, (iii) couldn't finish the rehab and (iv) had just walked away.

The seller laid out his frustrations to me - that he’s just too old to deal with the weight and stress of foreclosing on the owner and shouldn’t have to anyway if the guy had only done the right thing and honored his commitment, and on and on.

Then he asked me the question...

“How about if I just sell you my mortgage, instead of you buying the property?”

Bingo!

The amount of the mortgage was $60,000.

I offered him $15,000 for it.

After negotiating back and forth, we settled on a sale price of $30,000 for the mortgage and agreed that I would now have to do the foreclosure to get the title to the property.

Once my attorney prepared the assignment of mortgage, the assignment was sent to the courthouse to be recorded on the Official Records. In order to get the $30k to close, I drew it on a credit card equity line of credit, so I didn't have to use any of my own money.

The next thing that happened was flat out amazing...

The newly recorded assignment actually triggered other private note investors to send me direct mail offering to buy my newly acquired note.

One note buyer actually called me directly and wanted to buy the duplex, as did I, but he said he would now buy the note from me and do the foreclosure himself. I told him I would sell the note for $60,000 (remember I paid $30k for it just days earlier) and we agreed on a price of $60k.

This was a good deal because remember - the ARV was 100k and it only needed 5k in repairs.

So I sold him the note for $60k and made a tidy net profit of about $30k.

All in all, I only had a few days of holding costs.

Moral of this story: Whenever you see a private mortgage recorded on a property, always think about offering to buy the note at a discount.

This is yet another way that driving for dollars can really pay off big. Remember, this duplex was NOT EVEN FOR SALE! This is how you find the deals no one else knows about and cuts out your competition!

Enjoy the journey!

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