Cash Flow With Joe

What comes first — the loan or the deal?


The two main obstacles most beginner investors experience are “Where do I find a deal?” and “How do I pay for it?”


This situation feels a lot like the age-old question, “What comes first — the chicken or the egg?” In order to buy a house, you need to secure funds to pay for it. But in order to secure those funds, you need to have a deal under contract to present to your lender.


This seems like a catch-22. You really don’t want to put a house under contract if you can’t get a loan. Right?


What if I told you there was another way to get your deals funded? Let me explain a deal we just did, and you can decide if it’s a scenario that could work for you too.


We were contacted by a seller who had inherited a property. Four years ago, their parents passed away. Afterward, the seller probated their parents’ will, making sure they did everything needed to put the property into the estate so that it could be divided between three siblings.


The problem was that the house needed updating in order to be ready for rent or sale. And neither one of our seller’s two siblings were willing to contribute any money to maintain the property, much less fix it up.


That means our seller got charged with the upkeep of a property they couldn’t afford, couldn’t sell and couldn’t rent. As a result, the property had sat vacant for the past four years.



During that time, hoodlums had broken into the house, taking things that held little monetary value, but were still tremendously sentimental. Meanwhile, the roof had begun to leak. This house was now an emotional and financial millstone hanging around our seller’s neck.


When they called us, they had a pretty good idea of the fair market value for the house. That’s because they had had an appraisal completed on the property before they called us, which came in at $40,000.


We couldn’t pay that amount for the house, even though that was what it appraised for. You see, we have to buy things at a discount in order to make money. We presented this fact to the seller and let them know we could make them an offer if they would “partner” with us.


They asked me what I meant by partnering. I told them that if they would work with us, and allow us to pay them in one lump sum after we fixed the house up and sold it, that we could offer them more for the house than if we paid all cash.


We went through the numbers and educated them on how we would protect them by recording a deed at the courthouse that said they had a lien against the property. This lien meant we had to pay them off when we sold the house. They went with that option, and we bought the property.


The purchase price was $30,000 – notice that this number divides the money evenly between the three heirs.


So what just happened? We just got them to agree to owner finance the house to us.


And we did that by using very few technical real estate terms. We described things like owner financing, security deeds and even the terms of the note without using any of those exact words.


By avoiding real estate jargon, we made them feel comfortable, and we got the deal done.



The biggest source of private money is found in the equity of the houses you are trying to buy. If you can learn how to ask people for owner financing in a way that they understand and feel comfortable with, the owners can lend you the money you need to purchase the deal.


So let me ask you this: what comes first — the loan or the deal? The answer is that they are one and the same.


Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to or call Joe at 678-986-6813.

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