Every once and a while I will find good real estate invstment deals through local county & municipalities auction sales. I saw a great deal on a home after doing some online research. I ending up placing a bid on a home that was in need of a new roof & some much needed siding repairs – but otherwise was in good condition. The property was held by an out of state buyer who had it maintained but left it vacant for 5 years.
“Winning” the property for $20,000 I turned around and flipped it as a Lease–To-Own deal for $37,000 @ 12% with $3,000 down to a Rehab guy who wanted it as a buy & hold investment deal. For 4 years he rented it for $775-$875, paid all taxes, and maintained it at his expense including replacing the roof and siding.
The City Assessors decided that because the home was NOW in great shape they tripled the assessed value for the taxes. This incerase in taxes ended up leaving the investor with little cash flow. So he offered to hand back the property so he could move onto another that at least cash flowed.
After collecting $21,263 ($3,000 down plus $18,263 in payments) the property now owed me nothing. Got 100% of my out of pocket investment cash back in 4 years.
This is what happened next….
A tenant then offered to buy the home for $50,000 @ 10%, 30 yr term with $5,000 down. Once he signed the contract – he gutted the interior removing all the lathe and plaster. He continued to make improvements of his own and had the whole house re-wired, re-plumbed and the basement walls & floors were rebuilt.
After 4 years of payments he was unfortunately incarcerated. Thourgh legal channels he signed it back Deed-in- Lieu of. The property had generated another $18,561 after $1,500 in legal fees and $6,000 for a complete water line replacement.
And then this happened…..
It was immediately re-sold to another investor, $58,000 @ 11%, 30 yr term making it an annuity of sorts generating over $6000/yr with no money invested.
Hope this encourages some of you investors. Cash Flow Investing is pretty simple. Working with other investors, lease to own tenants and owner financing are all winning strategies!