This is how to you can actually OWN a house without spending a dime and with any credit. This is the stuff gurus are teaching for tens of thousands of dollars.
Richmond, VA, 1995…I was 18. I had finally grown into my teeth and nose, learned how to control my tendrils, and could eat an entire pizza without gaining an ounce. Aaaaahhhh those were the days…kinda. I was also working a series of crappy jobs trying to maintain my apartment and still have the money left over to splurge on Monday’s half price pizza night at Sal’s. BTW, that worked out to being about $4.50 for an entire large, cheese.
I drove a myriad of shitty vehicles costing in the $500 range. I had a Dodge Aries with woodgrain sides and windows that were consistently off track, no ac, and a giant rip in the driver’s seat with a spring poking through which tore my clothes almost daily. And that was the best one…. My Honda Civic had so much rust that you could see outside through the floorboard. I actually came out to find the homeless dude I gave coffee to each morning sleeping in my car; he told me “Whoa, your car is a real piece of crap.” -_- #thanksdude
So the last straw was this….
I was working for a uppity, yuppity company for just over minimum wage. The business was owned by a man named Tom and his execs were his daughters and son in law. #nepotism They were one of these “old money” families who thought hard-times meant having to wear your sister’s dress from last year to cotillion. (This was an actual interoffice debate with the result being Meredith gets a new dress and our paychecks bouncing whilst their cars were all being serviced by a mobile detailer.) Way off topic…
Anyway, I had a green and rust (I don’t mean color) pickup truck with a short in the steering wheel making the horn blow at random while driving down the street or at a stop sign. The brakes were intended for Paul Bunyan or The Incredible Hulk because I had to pull up on the steering wheel and push with all my 115 lbs to stop the damn thing. I also was saving a few bucks by tossing my trash in the back if my truck and throwing it away at the office dumpster. Picture me in my business casual driving this giant green beast to Yuppyville Commons, aka my office, horn blaring, and (this is the best part) crows riding in the back on the bag of trash I was to bring to save $7 a month.
I had become “friendly” with Ashley, the owners oldest daughter but I did not want her to see that I was living in such poverty.
One day I was on my way in to work, horn blasting, crows flying…. I pass the entrance to the neighborhood before my office complex and a car starts to pull out in front of me! Oh Shit!!! I go to lay on the horn but it is already blowing!! There is no way I can stop this monster in time!! Luckily, the driver stops, dead in the middle of the lane going the other direction. I go by as if in slow motion. Horn screaming, I’m pulled up on the steering wheel making a desperate attempt at stopping, the crows hanging on for dear life….I make eye contact with the driver. Its Ashley, looking horrified. #FML
On this particular day I was going to talk to “the Team” about doing lead sales rather than parking my car and leading a canvasing team to door knock getting leads for the sales team. Instead, the conversation was “I think you would do a great job leading our telemarketing team setting appointments.” #sigh
I decided this was the day that I was getting a new car. I had little money and zero credit. What to do?
I had seen a commercial with a goat and a shady dude saying “We will finance your car no matter your credit with as little as $500 down.” I went to the dealership in my heap of green poop as a trade in. I met a heavy set, friendly guy who gave me $200 towards the down payment for the vehicle I had affectionately named The Angry Hulk. They did indeed finance my car. It was about 4 years old and had no bells or whistles but it also stopped on a dime, utilization of the horn was voluntary, and I was proud af.
When I bought the car I was told that the title would remain theirs until I made my last installment payment but I had all of the rights and responsibilities of the owner. I could drive as many miles as I wanted. I could get speakers installed or whatever. If it broke, I have it fixed. DONE!!!! I was happy as a pig in poo. (Sometimes I’m a country girl from central Virginia and I think that phrase proves it.)
Moving on to real estate, today we are going to talk about the non-recorded purchase. This is how you can ACTUALLY buy real estate with no money and no credit. Completely legit.
Like my Green Gremlin, the non-recorded purchase goes by many names. Pocket Deed, Contract for Deed, Land Use Contract, Deed in Escrow, and Non-Recorded Deed. There are probably more but remember, if you are making a PURCHASE (not a lease purchase) and the title is not being recorded, you are entering into this type of deal.
This type of transaction is just like the one I had for my first decent car. The dealer held the title as collateral to ensure my payments are made.
Just to simplify we will call this a Deed in Escrow hence forth. The seller hold the deed until it is paid.
Deed in Escrow = A purchase in contract only as there will be no recording of the deed upon possession but at a later date.
How does it work? A deed in escrow purchase is facilitated as a contract between a seller and a buyer where the buyer pays installments to the seller until the term expires or the buyer cashes out the seller.
Basically, you will enter into a contractual agreement to either buy or sell a property in exchange for monthly payments. The sales price, down-payment (if any), interest (if any), and length of the term are included. You will also have a deed to show transfer of ownership that will be “held in escrow” until the term is expired or in the event it is necessary to comply with any local, state, or federal issues where deed id required. You want to be sure to have this last piece written into the agreement.
You can draft a deed and just have it notarized or have your attorney conduct the entire closing. Although it is not necessary to structure this type of transaction; be advised that I strongly recommend utilizing the method that involves an attorney especially when you are the buyer. You want to be protected. I will touch on this in more detail later.
Who is my seller? This is a good option to pitch to a seller who feels uneasy about a sub to or owner finance. You will look for a seller who is comfortable with transfer of ownership and monthly payments. This can be a person with or without a mortgage.
Why do this rather than another form of creative financing? This, my friends, is a two-part answer. Are you the buyer or seller?
What are the benefits? The benefits are pretty obvious to me. You can own property with absolutely zero closing cost.
So, in closing; I was pleased as punch to purchase my new car even without title. It served me well at that time. You can be the proud owner of as much real estate as you can handle with almost nothing out of pocket. You can collect a hefty down-payment and have a ton of security. This is not a bad deal.
This is the next to the last of a seven part series on creative financing. Click the title of interest below to read that article.
Five styles of creative financing part 1
Five styles of creative financing part 2
Subject to the existing mortgage
Remember, I love to talk….OBVIOUSLY…. Feel free to ask questions. I really enjoy the feedback. Also if you want one-on-one assistance, I do offer mentorship programs.
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Happy investing my real estate junkies!!!
I was born an entrepreneur. I am pretty certain that I was peddling passies in the hospital when the nurses left the room.All of the other kids in the neighborhood were riding bikes and playing with dolls I was selling jewelry out of a catalogue and creating a back yard consignment shop. At 21 I became a real estate investor and fell in love. This was/is/ and always will be my passion. I have been madly in love with flipping, holding, and writing offers on real estate that seem crazy for 18 years. Ladies and gents I am willing to share the love of my life with you. Maybe its polyamory maybe its jut because I can’t shut up about it. Either way I will be sharing every mistake I ever made and the lesson that came from it. I love questions. Please ask away!!!