Real Estate IRA Investing Technique – Re-Stealing Properties – A Potentially Profitable Technique with a Double Edge!

Posted on January 6, 2013 by

Real Estate IRA Investing – The Purchase

A young couple found a home they wanted to purchase with their real estate IRA. The purchase price was $50,000. They borrowed $55,000 and had $800 worth of repairs. I know that $800 worth of repairs for a house purchased with 1,400 square feet, three bedrooms, and two baths through a short sale sounds absurd, but these are actual numbers from an actual deal.

Real Estate IRA Investing – The Repair Bill

I’ve personally never seen $800 worth of repairs in my entire life and I’ve been in this business for 40 years. I can’t even walk through the house for $800. I don’t know what it is but I’ve never done that, so that was phenomenal to me. The deal’s great but how did you get $800? They actually got a little cash back at closing since they borrowed $55,000 for a $50,000 purchase.

Real Estate IRA Investing – Net Equity

The market value was $90,000 at the time of closing and the loan was $55,000, so they had a net equity of $35,000.

Real Estate IRA Investing – Net Monthly Income

The couple borrowed $55,000, from a self directed Ira at 8% amortized for 20 years, all due in seven years. The rent on this property is $875 a month, and their monthly expenses, including their loan payment and a vacancy allowance, are $665.00.

They are netting $210 a month on this deal. That’s correct, positive cash flow with no points.

Real Estate IRA Investing – Re-stealing

The reason that they got this property is there was a lot of bidding going on and a lot of offers being made, but because of the marketplace everyone was trying to re-steal the property.

Do you know what re-stealing is? It’s already a fabulous deal and it’s not good enough so investors place offers that are below the already great price in an effort to re-steal the property. It was on the market for $50,000 and the other investors were offering $42,000 and $43,000 in an attempt to re-steal the property.

Sometimes, as an investor, you’ve got to take a step back and say I’d rather have the deal. It’s a good deal. Suck it up that you didn’t get $2,000 off or you didn’t get $5,000 off. You’re already buying it cheap – 55% Loan to Value. The young couple realized they already had a good deal and offered the asking price. As a result, the young couple walked away with the deal and the investors that were trying to re-steal the property were left empty handed.

Real Estate IRA Investing – Re-stealing, the Double Edge

Re-stealing can lead to some great deals in which investors can maximize their profits by placing low offers on properties that are already listed well below market value. On the other edge, as you saw in this deal, re-stealing can also lead to lost deals. When using this technique, it is important to weigh the situation and determine whether you are willing to chance losing the deal for a lower price or whether it is time to seize the opportunity and pay the asking price.

The moral is if the deal is good enough don’t let greed get in the way of PROFIT!

Jim HittJim Hitt is the Chief Executive Officer of American IRA and he has been committed to all aspects of investing for more than 30 years, using self-directed IRAs for his own investments since 1982. Jim’s forte is the financing and acquisition of real estate, private offerings, mortgage lending, business’s, joint ventures, partnerships and limited liability companies using creative techniques.

Contact Jim Hitt

FacebookTwitterGoogle+PinterestShare/Bookmark

Leave a Reply