I was a new resident of a city in Tennessee, living in a rental while looking for a house to purchase. I had gone to the grocery store after living there only a couple of days and took a wrong turn on the way home. I wound up on top of a small mountain with winding roads and beautiful old homes. There on my left was a house with a grown up yard, peeling paint, but a beautifully landscaped yard. It was obvious that it had not been lived in for years, because the grass was knee high and there were no window coverings.
This was just what I was looking for. A fixer that needed me as much as I needed a place to live. I called the tax office and discovered the owners name and phone number. When I called, his wife said yes, they would love to sell the house. They had purchased three homes in that neighborhood at a back tax sale the previous year.
Her husband was a commercial real estate agent and did investing as a side hobby, but he was too busy to complete this one.
The house was purchased at the tax sale for less than $3,000, but they had not cured the deed, and just wanted to sell this one to an end user. I had been in real estate for over a decade, so I understood the value that I had stumbled across. After making an offer the next day of $15,000 with them financing the entire amount on payments, a realtor friend of the owner offered $15,000 cash. I countered with 16,000 cash. He countered with $17,500 cash. I waited a couple of days after checking on financing options and offered $20,000 cash within 15 days, which was accepted. I held my breath hoping the Realtor would back off, which he did.
I took many photos of the house, did my research, and came up with a rough appraised value of $75,000 for the home. Then I approached my bank with the info… keep in mind that I had done several deals in Louisiana and California, but this was my first transaction in Tennessee, so I had to use my bank in Louisiana for the temporary funding. They cut me a cashiers check for $25,000 which was to be repaid within 90 days. I purchased the house and then went to the courthouse to begin curing the deed, a process which took weeks. During that time I began cleaning up and painting. We hauled three trailer loads of trash from inside the house. It had been vacant for over two years. It had oak hardwood flooring throughout, beautiful handcrafted kitchen cabinetry and was a jewel that needed polishing. I later discovered the house was built in 1920.
I lined up permanent financing through a mortgage company based on repaired value of $76,000, and was able to secure a $36,000 loan without even a credit check. With these funds I repaid the $25,000 to my bank, covered the legal costs of clearing the title, and had enough left to repair the roof, install central air and heat, remodel most of the kitchen and two of the bathrooms, and paint the exterior. I had always enjoyed remodeling houses that I purchased for investment. The neighbors loved me and would come over to help when they got off work. There was a lot of neighborhood pride, and the old homes showed it.
I lived there for a couple of years and finished the painting and remodeling. The house had 3 bedrooms and a full bath and a 3/4 bath on the main floor, 2 bedrooms and a full bath upstairs, and another bedroom with a 3/4 bath and huge game room in the basement. There was also a woodworking shop in the basement with a separate entrance from the back yard.
The detached three car garage needed very little work, and the terraced back yard had a fountain and patio that was a wonderful place to sit and watch the chipmunks, squirrels, and birds. There were over 100 tulips and 14 dogwood trees in the yard. It was a lost treasure because someone forgot to pay their property taxes.
The final appraisal came in at $126,000 after over a year of working on it in my spare time. I was a Financial Advisor with a local brokerage firm back then, so I didn't have a lot of extra time except evenings and weekends. But I lived there free since I took in a tenant who covered the mortgage note and utility bills. A couple of years later, I sold the home at market value and moved up. It doesn't get much better than this.