Newbie Needs Help with Unusual Opportunity to Buy & Flip

[Sharon Sweeny]

I joined Bigger Pockets quite awhile ago, with the intention to become a wholesaler. Everyday life took priority and aside from doing a little reading on the net and watching a few instructional videos, I never pursued it.

Now, a deal has dropped into my lap; a deal that was under my nose, unrecognized, for the last four to five months.

Long story short, I rented a small, one story craftsman with rent much below market value. Turns out the rent was so cheap because the landlady had lost her rental license for non-compliance in bringing the property up to code, as well as for not fixing many cosmetic and minor structural issues. I found out she didn't have a rental license when both the area and head city inspectors knocked on my door. For some unknown reason, they decided to give her a chance to fix everything that needed to be addressed, and to let me stay in the property.

Now four, almost five months later, she still has not finished, or hired workers to finish, all of the "violations" on the work order from the city. She paid both a plumber and an electrician a lot of money to bring the house up to code. That's all fine and good, but as to the minor violations/cosmetic stuff:

• She hired an elderly gentleman to take care of all the minor issues. I say without malice that this man does not necessarily use generally accepted construction methods. He also works at a snail's pace, taking days to finish a project that would take a professional a matter of hours, if that long.
• Virtually every business day for the last four months, someone has entered my home while I'm gone and performed "work." "Work" but not cleaning up after said work.
• In the last couple of weeks leading up to the deadline, instead of instructing her handy man to address the remaining items on the city's work order, he has installed a door to the basement where one had previously been, but someone had removed it (not on the work order) and is in the process of putting a new counter surrounding the new sink, also not on the work order (a sink he installed incorrectly).

Landlady also texted me and said, "...I'm feeling like there's nothing to be gained from sticking with those people [city inspectors]..." Editorial: Yep, nothing to be gained but a rental license for a house she's been paying on for about 20 years.

The house is tiny, with two tiny bedrooms that share a common wall. She had her guy knock the wall down to make one big bedroom. Don't even ask about how long it took her guy to patch the channel on the walls and ceiling where the adjoining wall used to be. Or the daily mess he left behind.

The inspector is coming to do a final inspection next Tuesday. The inspector called me last Friday and told me that if she finds just one item on the work order that is not complete, she will vacate the house immediately. That means I would not be able to live in the house beginning that day. She also said I could leave my stuff in the house, I just couldn't live in it. (The plumbing, electrical and structural inspectors passed the plumbing, electricity and removal of wall, so the house is not "unliveable." It's just that no one can live in it and rent it while my landlady is the owner.)

So the landlady proposed a solution: she said she would sell me the house on a contract for deed, no money down so I could continue to live here. She also said that I could "give the house back to her anytime." And she said flat out that her handy man will be on vacation the first week of August, so no one will be in the house working for that week. I believe she implied that they would be in the house daily even after closing on a contract for deed.

The neighborhood is "in transition," or approximately Class B to C. However, my job is to drive all over this part of town making deliveries. I have seen work crews in every part of this neighborhood fixing up the inside and outside of both duplexes and single families. I've also seen several houses that started out as single families that were converted to duplexes. Now they are being bought and turned back into single family residences. There is quite an opportunity in this market.

I have no contacts in the real estate industry and I was wondering if a real estate agent familiar with home values in the city of Minneapolis could draw a few comps for me. I've decided that I will not buy this house from her on a contract for deed. I want to flip it to someone who wants to rehab it and sell at retail.

I would also appreciate advice on this deal or anything else from anyone reading this post.

I believe everything happens for a reason, and my entrance into real estate wholesaling dropped right into my lap. I wanna run with it, but I have no real estate experience, aside from filling out a few forms when I was a legal secretary a million years ago.

Thanks in advance to anyone who can help, tutor, or tell me how to handle this so it is a "win-win-win." (Win-win-win = me, seller, flipper)