I successfully wholesaled an Ugly “Hoarder's” House. My story begins with how I found this particular real estate deal. As part of my real estate investing business and marketing, I place a lot of ads on Craigslist that look like this: “I Buy Houses Cash, Any Area, Any Condition”. One day I get a call from a lady named Alice who responded to one of my ads. She shares with me that she has a house that is in really bad condition and should probably be torn down. She further explains that she would take $50,000 for the property “as-is”. I told her I would check it out and get back to her.
I looked it over on Google maps and Zillow and decided the lot would be worth about $15,000. I called Alice back and told her all I could pay was $15,000 because the house was in such bad shape. She tells me that her & her husband need $50,000 for the property because they want to buy a motor home & cannot sell for anything less. Over the next several months I would occasionally text her and ask if she was ready to sell her property yet. Eventually she said they would take $40K. I explained if the house was in great shape I could do $40,000, but I can only do $15,000 in cash.
Finally one day she texts me and asks if I can do $20,000. I communicated to her “the max I can pay right now is $16,000, should I come over with the paper work, and we can do this today?”” Alice texted me back and said they will think about it. The very next morning I get a text that simply says, “We can do the $16,000”. I jumped in my car and drove the 20 miles to a nearby rural town.
I was greeted by half dozen dogs of all sizes, luckily all friendly. Alice walked me around to the back of the house. I was shocked at what I had seen. The property comprised of a half-acre of old motor homes, boats, washing machines, old lawn mowers and cars and trucks. There was a barn and lots of sheds that were also full of junk, even piled high on the roofs. There were pigeon pens and chickens and ducks everywhere. The mother-load of an Ugly House on the exterior.
Then we went into the house. I noticed rafter tails that were rotted and areas of the roof that was sunken in. There was a wash room that had a lot of water damage, a bathroom that was completely gutted to the studs. Next were the bedrooms which were stacked floor to ceiling with stuff. The light switches did not even work. The pungent odor of animal urine took my breath away. I could go on and on.
We went out the front door which was rotted and delaminating, the front yard had several large trees that had fallen over but continued to grow. Looking at the house I could tell the second bedroom had been added on much later because you can see that the stucco and roof line didn't quite match.
I looked at Alice and she was quietly waiting for me to say something. I tried to hide my shock and disbelief. But I can all this way for the real estate deal so I do my best to I tell her with a straight face that the place needs some work but I will take if her hands for the $16,000. We walked around to the back and found an old wooden picnic table under a big shade tree to which we could go over the purchase agreement contracts. Her and her husband were friendly and a really a cute older couple, I felt right at home with the dogs and the place because I grew up in a similar environment.
They signed my agreement to purchase contract and I gave them a $5.00 earnest deposit. As I drove away I was asking myself, have I made a mistake? Will anybody want this “Okie Hillbilly Heaven?” I got home and optimistically placed an ad on Craigslist for “$32K Handyman Special”. I was really surprised to start getting calls a few hours later. The first caller was really aggressive and offered $20,000. I told him I just got it on contract a few hours ago and I want to get closer to my advertised price. He goes up to $22,000 then $24,000 and was pressuring me to sell it to him at that price.
I told him, if you can do $25,000 we might have us a deal. He wanted to think about it and said he would call me back. The next caller that responded to my craigslist ad – I told him I think I have it sold for $25,000. He asks me: “Will you take $26,000?” I tell him that just might work. He wanted me to meet him at the Title Company the very next morning. I told him I will just email my contracts over there, you go there and sign everything and get it started.
The buyer wanted to inspect the property a little closer. He wanted to wait till after they vacated to pay. I told him that would not work, but we can write it into the contract that we are going to hold out $5,000 until they are out. He then asks me: “What if they leave all that junk there?” I laughed and told him, I guarantee they will, that is part of the deal.
He then asks me, why do I have to pay all the closing costs? I told him buyer pays closing per purchase agreement and that is how I do my real estate deals. I asked how much is it? He tells me $900 I told him, hey, that's not bad at all, my last deal they charged my buyer $1,500 on a $12,000 house. I was really stressing out because the seller Alice called several times saying they needed some money. I told her to be patient because we have to do a formal closing & you will have to go to the Title Company to sign the papers. She asks why, we own the house. I tell her that's just the process of selling your home.
Finally, the Title Company calls and says my check is ready. It took 3 weeks to get the house on contract and pick up my check. Can you imagine after leaving the Title Company and this insane guy (me) driving thru traffic smiling and laughing that I made $10,000 on this real estate deal on such a dreadful property.
I always follow up with my investors & buyers as part of my business model. About 4-5 Months later I emailed my end buyer and asked him how are things going? He told me he had to order 18 dumpsters at $500 each and paid 3 guys salary for 3 weeks and spent $14,000 just cleaning up the place and still hadn't done any repairs. Some investors have all the fun.
Let's make some Money.