I am not a big time investor. I had bought and sold a few properties at the time, that this deal presented itself. This was a small purchase I made with a great reward.
I found the property while driving home one day, it had a FSBO sign in the window. I would always drive home a different way every night to look for opportunities. It was a dilapidated home in Dover, FL where the previous owner had passed away, the heirs were trying to sell for $50,000.
Based on the condition, I knew that was too high, I found out there were 7 heirs involved, so I figured I would multiply that by 5k each and they would jump on it. At first they said no, I told them the offer was good for two days and I could close in 7 days. Well they accepted my offer. Being self-employed and having a few flips under my belt, I had the $35,000 to close the deal in the bank.
Grabbed the hammer and did some minor repairs to the home and spruced up the outside. The repairs consisted mostly of some exterior wood repairs, interior paint and mainly cleaning up the land and installing appliances. When it was ready, I put it up for rent for $500 a month. As only luck may have dealt it, I found a young couple who moved in and 6 months later wanted to purchase.
I researched the property and realized it had 6 small lots attached to it that could be used to put a mobile home on. So I split the lots off and then sold the house to the young couple. I owner financed the home and land for $50,000 at 10% interest.
I was worried that they may not keep up with the payments and investigated selling the note. I had taken some training a few years before to learn how to buy and sell notes. I had created a few notes in my day and wanted to learn more about it. So I contacted the school to get a current list of note buyers and found one in California that made me an offer. I informed them that they buyer was a slow payer and they said that's not a problem.
I then sold the note for a discounted price of $43,000. So far so good. Let�s recap. I bought this property for $35,000 cash. Put in only about $1,000 in rehab time, materials and labor. Made $3,000 in rent cash flow and another $7,000 on the sale of the note and got 100% of my initial investment of $36,000 (cost plus rehab) back. At this point in the story I am up $10,000 in profit. Hang in there it gets better.
Then I bought a mobile home for $6,000 to put on the property lots that I had split off. Put in a new septic tank and made some improvements all for around $10,000. Rented the mobile for 1 year at $500 a month.
After the lease term was up, I then sold the mobile for $39,000 with $10,000 down – owner financed for 12% for 5 years.
When I placed a FSBO sign in the yard and one of the neighbors who only spoke Spanish had his daughter call me on the phone and translate for us. He wanted to buy it for her, so I gave her the terms and we met and agreed. He actually sent me one payment too many and I had to run him down and give him his $625 back because he had overpaid at the end of the term and his daughter translated that he was happy that I was honest and returned his money to him. He smiled, we shook hands and I said thank you in Spanish and he said the same. Nice older gentleman that was trying to help his family out. I admire people like that.
No agent or attorneys was used for any part of this multi-layer deal, I wrote the contracts and no commissions were involved. I took the contracts to a title company and they did the closing, recorded the private mortgage, transferred the notes and all the title work.
So I made $7,000 on the sale of the note for the house, $3,000 on rent for 6 months on the house, add to that the $6,000 on rent for the mobile home, $23,000 on the sale of the mobile home ( Sold for $39k minus investment of $16K) and another $5,000 in interest from the note payments. Technically making close to $45,000 on a $35,000 investment. Not a bad return for a total of about 18 months.