My 3rd property (I don't really count the last one) came from one of only two trips I have ever made in my life to one of those real estate investment groups. But there is was, a stack of fliers laying on a table advertising a small house for sale by owner. And it was just down the street from that last one I had just sold the contract on. So I grabbed a flier after the meeting was done and headed home. When I read the details, I realized that there could be an opportunity here. Memory fails me a little, but I think that the guy was asking $35,000 for the house, maybe it was a little less. Anyway, I called the seller the next day and got some details, then drove out to see it after work.
Wow-this house had seen better days. Most of the windows had been broken out, the walls and floor had holes all the way to the outside...and then there was the basement. I would like to say that I inspected the foundation and floor joists, but I didn't. Not because I didn't want to, but because I couldn't. The basement was so full of junk from floor to ceiling that I could barely even open the door.
So I knew I needed to buy this house, but not for the asking price. I offered the seller $25,000 cash for the house as-is. Turns out this guy had bought a whole portfolio of properties from another investor using seller financing and had negotiated to allow for individual deed releases so he could sell some. And he definitely needed to sell this one as it was beyond what he could repair himself. It had been vacant for some number of years and needed alot of help. I felt bad for the seller, because he had bought the portfolio with high aspirations, but was in way over his head on the payments and not much cash flowing in since several were vacant and needing major repairs.
He countered back at $30,000 but I said "no". That was the same price as the one down the street and it was in much better shape. I told him $27,500 was the best I could do, take it or leave it--he took it. Along with the house he also gave me the name of a good handyman, and this proved out to make the deal even better.
The handyman named Johnny did all of the work. We replaced all the windows, flooring, cabinets, gutted and rebuilt the bathroom, pressure washed everything, hung shutters, painted exterior trim and probably alot of other small stuff I am forgetting. Most importantly, we cleaned out the basement. This in itself took more than a complete construction dumpster to get rid of. All told, I put about $8,000 in materials and labor into repairing it, including appliances. Like I said, Johnny was the best part of the deal!
I love this house as the area has appreciated as I expected. The same tenant has been there for over 3 years now. It is probably worth $70,000 or more now. I got a loan once it was all done it and it became nothing out of pocket investment.
No comments:
Post a Comment