To do any type of purchase successfully, you have to line up your financing. A few years ago, two young men called me, knowing that I buy property. They had entered into a contract to acquire a rundown multiunit property in a very good area of Chicago known as Lincoln Park/Depaul. They know that the property was going into foreclosure (that is, the bank or mortgage company was going to sell because the owner wasn't making his mortgage payments), and they knew that there was value in real estate.
They told me that they has contracted to purchase this piece of property and would be happy to sell it - as long as I could move quickly and close the sale in less than two weeks. Something there didn't seems right to me. In a conventional purchase, the buyer requires more time than that to inspect the property and to get a mortgage loan.
The truth of matter was they these two young men, who just starting a real estate career, hasn't understood how critical it was to have their financing lined up ahead of time. They came to me knowing that if they didn't sell the property or flip the contract, they were going to lose their earnest money (money they give to seller as good faith that they would buy the property). They didn't have the money to close the deal. Fortunately for them, I had immediate financing available and was able to give them a profit for other contract when I stepped in and bought the building, I renovated the property and kept it as rental building for four years. At that point, i made the building a condo.
The economics of the deal were as follows: http://www.buyincomeproperties.com/...ping_Home.shtml