Single Family Home. 3/2
Purchase price: $18,000
Cost of Repairs and Renovations: $14,000.
Appraised for $65,000
You probably don't need me to explain the numbers to you, but this project came out to roughly thirty-three thousand dollars ($33,000) in equity for just a little over three months of work.
I had a number of different ways I could have purchased this property, but because the initial price of the house was so cheap, I just used my credit card and then refinanced the property when I was finished.
I got an interest only loan at 3.89% (or something like that), and the payments come out to $188.89 per month. (This does not include tax and insurance).
Within two weeks, I got a renter in the house who pays $700 a month.
This has been a killer deal for me! And the renter has been virtually hassle-free for the past several months.
I realize that while my “gross spread” is phenomenal, you may be thinking to yourself, “I could never do this in my area, because I can't buy a house that cheap. But rest assured… it's not about the numbers, it's about the percentages. If the house had been purchased for $180,000… with an After Repaired Value of $650,000… with the ‘gross spread” so strong, it would have been easy to find someone to loan me the money for short term use to do the project.
So, How Did I Find This House
At Such A Great Price?
That's a good question. Because I own two other companies in addition to my real estate investing, I don't have as much time as others do, to be hunting down great deals. So, how did I get it?
A husband and wife wholesaler/flipper found the property. I paid them.
They came to me and said, “We've got this great “fixer” property and we'll flip it to you for a few thousand dollars.” I was happy to pay them, and they were happy to take my money. Basically, they just got the contract on the property and then signed it over to me and picked up a few thousand dollars for their efforts.
The initial seller that contacted the flippers was an out-of-town lady-landlord living in Washington, D.C.. She'd rented the house (in San Antonio) to an older man who was a bit of a kook. He had two sons in their early 20's who were professional thieves. They moved in with the old man and proceeded to completely trash the house and use it to store their stolen goods. (And party and let their friends use it as a flop house, too, apparently).
So, the old man finally had enough of their antics and moved out. They continued to wreck the house for several more months.
The lady landlord in D.C. wasn't getting any rent. She didn't want to interrupt her life and have to fly back to San Antonio to fix the house. Nor did she have the money to fix it. She just wanted the headache to go away!
And that's where my wholesalers/flippers who found the property entered the picture.
Now personally, I like collecting rental properties. So the idea of getting “in and out” and making a quick buck doesn't hold as much appeal to me as it does to some. But my flippers were happy as heck to help this woman out of her predicament and make a few thousand bucks in a couple of weeks for their troubles.
As you can see… it turned out pretty well.
Happy investing from a professional dog trainer turned investor…
San Antonio, Texas