In the latest episode of the Raising Private Money podcast, Jay Conner sat down with mastermind member Tim Benskin to discuss his latest deal in Swannanoa, North Carolina.
Tim shared his unique approach to acquiring, financing, and profiting from real estate investments, offering invaluable lessons for aspiring and seasoned investors alike. Today, we will dive deep into the key topics discussed, providing a comprehensive guide to understanding Tim Benskin’s successful strategies and tactics.
A Fortuitous Encounter: The Genesis of the Deal
Tim Benskin’s latest deal began with an unexpected opportunity. While working on a property purchased from a wholesaler, Tim was approached by a neighbor who inquired if he would be interested in buying his house. This initial conversation set the stage for a profitable transaction.
Key Takeaways:
- Networking and Relationship Building:
Tim’s success in this deal highlighted the importance of maintaining good relationships with contractors, neighbors, and other stakeholders in the real estate industry. An open line of communication can often lead to new opportunities. - Opportunistic Mindset:
Being present and attentive during property renovations can present unforeseen chances to acquire new properties at favorable prices.
Negotiating the Purchase Price
The neighbor initially asked for $150,000, but after assessing the property and understanding the seller’s needs, Tim successfully negotiated the price down to $130,000. This $20,000 reduction set the foundation for a profitable investment.
Key Takeaways:
- Negotiation Skills:
Tim’s ability to negotiate effectively saved him a substantial amount on the purchase price. Understanding the seller’s motivations and maintaining a flexible negotiation stance is crucial. - Assessing Property Value:
Conducting a thorough property valuation, including an understanding of After Repair Value (ARV), is essential in negotiations.
Leveraging Financing: Private Money and Profit Centers
Tim financed the property using private money, borrowing a total of $130,000 from two private lenders. The strategic use of private money enabled Tim to acquire the property without using his capital while structuring repayment terms that supported a positive cash flow.
Key Takeaways:
- Private Money:
Utilizing private lenders can provide flexible financing options, often with more favorable terms compared to traditional lending institutions. - Multiple Profit Centers:
Tim created several profit centers through this deal, including monthly cash flow, a nonrefundable lease option deposit, and potential appreciation upon sale.
Innovative Selling Strategy: Work for Equity
Tim’s decision to sell the property through a lease option with a “work for equity” component was a masterstroke. This approach not only minimized his upfront renovation costs but also incentivized the buyer to invest in the property’s improvement.
Key Takeaways:
- Work for Equity Concept:
Allowing buyers to reduce their purchase price by undertaking necessary repairs encourages them to buy into the property’s value and care for it. Tim’s buyers stand to receive a $10,000 credit for completing specific agreed-upon repairs. - Reducing Risk and Increasing Profit:
This strategy reduced Tim’s risk and repair costs while increasing the property’s sale price to $187,000, considerably higher than its ARV.
Monthly Cash Flow and Final Profit Analysis
Post-financing, Tim’s monthly outgoing payments to his private lenders totaled $940. His lease option agreement brought in $1,450 a month, leading to a net positive cash flow of $284.34.
Key Takeaways:
- Positive Cash Flow:
Ensuring a positive cash flow is essential for sustainable real estate investments. Tim’s careful budgeting and strategic financing allowed him to achieve this. - Final Profit Calculation:
Over the two-year lease term, Tim projected a total of $53,044.86 in profits, underscoring the importance of detailed financial planning and monitoring.
Final Thoughts and Lessons Learned
Tim Benskin concluded by highlighting the importance of legal agreements and strategic planning. His meticulous approach to creating a shared driveway agreement increased the value of both properties involved.
Key Takeaways:
- Legal Diligence:
Proper legal documentation, such as shared driveway agreements, can significantly enhance property value and marketability. - Continuous Learning:
Each real estate deal offers unique lessons, emphasizing the need for continuous learning and adaptability.
In summary, Tim Benskin’s latest real estate deal showcases a blend of strategic negotiation, innovative selling, and effective financing. His approach provides a valuable blueprint for investors aiming to maximize their profits while minimizing risks. This episode is a must-listen for anyone involved in real estate, offering timeless wisdom for achieving success in the industry.
10 Discussion Questions from this Episode:
- Deal Sourcing: How did Tim Benskin initially find the property, and what role did word-of-mouth play in securing the deal?
- Negotiation Tactics: What strategies did Tim use to negotiate the price from $150,000 to $130,000? Would you have approached it differently?
- Lease Options: Can you explain the concept of a lease option and how it provides value to both the buyer and the seller in real estate transactions?
- Work for Equity: What does “work for equity” mean, and how did Tim structure this arrangement with the buyer to benefit both parties?
- Private Money: How did Tim utilize private money to finance this deal, and what were the terms of the loans from his two private lenders?
- Cash Flow Analysis: What was Tim’s monthly cash flow from this deal, and how did he calculate this amount after accounting for insurance, taxes, and loan payments?
- Option Fees: Why is a nonrefundable lease option deposit significant in a lease option deal, and how did Tim benefit from the $8,000 option fee?
- Shared Driveway Agreement: How did Tim’s decision to create a shared driveway agreement enhance the value of the property? Have you encountered similar situations in your real estate ventures?
- Risk Management: What are the potential risks involved in a lease option with a work-for-equity buyer, and how can these risks be mitigated?
- Lessons Learned: What key lessons can be drawn from Tim’s experience with this deal, and how might these lessons be applied to future real estate investments?
Fun facts that were revealed in the episode:
- Spontaneous Purchase Opportunity: Tim Benskin purchased a house after the neighbor of another property he was working on approached him asking if he was interested in buying their house.
- No Renovation Strategy: Tim decided not to do any renovations on the newly purchased house and instead opted for a lease option to purchase with a “work for equity” agreement.
- Creative Financing: Tim used private money from two lenders to finance the deal, paying different interest rates to each lender, while ensuring a positive cash flow from the lease.
Timestamps:
00:01 Neighbor offered house; price was too high.
06:21 Shared driveway agreement boosted neighboring property value.
06:59 Amazing deal; valuable lessons shared.
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book: Where to Get The Money Now?
It is available FREE (all you pay is the shipping and handling) at
https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
https://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. He maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal without using his money or credit.
What is Real Estate Investing? Live Private Money Academy Conference
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcasts:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Listen to our Podcast:
Comments