You Can Be the Bank — Help Us Buy Empty Houses

A friend was complaining the other day about only getting a one percent return on her bank CDs. I suggested she become a private lender. “You could earn eight to twelve percent on your money,” I told her. “And even better, it would be secured by real estate.”

“How could I possibly do that?”

“Simple,” I said. “When you decide to finance the purchase of a specific house, you wire the funds to the title company in time for the closing. The title company will give you the same lender documents that a bank usually gets for a mortgage.”

She thought that sounded like a good idea, and I suggested we could work together in Prince George’s County. Many empty houses are owned by banks after foreclosing on the owners, I explained, and these REO (real estate owned) properties usually need significant repairs before they’re ready for new homeowners. The banks are willing to sell at a lower price to an investor who can make a cash offer and close the deal quickly. “That’s where your help would give me an advantage,” I said. “My lower offers would be looked at more favorably than a higher offer that required time to get the money.”

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“When would I get my money back?” she asked. “And how do I know it will be safe?”

“It’s safe to the extent that the house has built-in equity at the time of purchase,” I assured her. “I only buy houses that can be acquired at a discount, and the value increases after the house is repaired. When it’s sold to a new homeowner, the title company writes you a check for the amount of your loan plus the accrued interest. Does that sound reasonable?”

“I guess so,” she agreed. “But what if you can’t find a buyer? What if you don’t have any money to pay me back?”

“If I can’t find a buyer, I’ll have to ask for a loan extension, and that’s more interest income for you,” I said. “You’ll get your money back with the sale of the house, and if I priced it properly, it will always sell for more than it cost.”

“Hmmmm,” she said. “I’ll have to think about that.” So she’s currently considering whether she wants to join in my mission of turning empty houses into homes again. I hope she does. Private lenders and real estate investors working together can provide a community service of improved neighborhoods. Nobody wants an empty house down the street.

buymyemptyhouse.com is a group of real estate investors in Prince George’s County, Maryland, established to stop the bleeding caused by an empty house and to turn these houses into homes once again. We are seeking to buy empty houses in Upper Marlboro, Bowie, Clinton, Hyattsville, Temple Hills, Suitland, and surrounding towns. If you own a house and can’t make the mortgage or tax payments, contact BuyMyEmptyHouse.

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