Found the property by referral from our postman. Elderly owner, who had lived in the house for 50 years, had moved out-of-state to be with her daughter. I sent her a letter and the son-in-law called me and said they were going to sell and the neighbor had made an offer of $82K. I said I could do better, didn't need financing, could close in a week, would take it “as is”, and wanted to purchase it for my daughter. Coincidently the son-in-law was coming in town to see the house and could meet me there in two days.
I developed a letter with an offer detailing the problems with the property and their expected costs, even though I hadn't seen it as yet. After seeing it I simply omitted the issues that didn't exist and offered $87.5K. The house was a time capusle from 1955 with original furniture, rugs, kitchen (metal cabinets), and fuse panel. The son-in-law called me a week later and said they would sell to me but that they wanted $90K. I said OK!!!!
The financials were…
Purchase Price $89,860.62 because of tax credit
Sale Price $183,445.55 net after all closing costs
Total expenses were – Garage sale of contents +$3800
Uninhabited Property Insurance $1320
Materials & Labor $3,160
3 ton air unit installed $2,800
Replace Electrical Panel $312 ( I did it)
Subtotal of Expenses ($11,845 – $3,800 from garage sale) = $8,045
Total Net Profit = $85,549.93
[P.S. my son-in-law didn't want the house at my cost, can't figure Architects!]
The Buyers who purchased it got 100% financing but we had trouble with the apprasial since no house had sold and been recorded above $175K in the area. We overcame this by asking a new neighbor for their HUD-1 because they had just bought their house for $220K but it hadn't been recorded yet and we gave the HUD-1 to the appraisor. The house was actually in our back yard so we moved our furniture into it while we rehabbed our house which took five months. Sounds like expensive storage but we had to “season” the property for the bank to accept the loan anyway.
We love your feedback and welcome your comments.
Please post below: