Most creative use of land I have seen yet!

[Eric Caputo]

     On my way to work, I see this property that has a For Sale By Owner sign outside. I looked it up on Realtor & Zillow to see the details. It's a 3 bed 2 baths 2,122 sq ft home on a 3-acre lot. From what I can see from the road, half the roof is covered with metal roofing, and the other half is shingles. The yard has tires and other trash in it. The first thing that comes to my mind is, distressed property= possible deal! I call the number on the sign and start talking to the owner. He's a 79-year-old gentleman that owns the home free and clear. He wants to sell this property and another he has so he can retire and travel around the country. I asked him if my partner and I could go take a look at the property and we would potentially make an offer on it. He agrees to let us take a look but we would have to wait till after the tenets are out of the house. He states that they should be out by Monday at noon. So, I make the appointment after that.

     We get to the property and it still looks like the tenants have things in the house. The owner didn't feel comfortable showing us the house when the tenants had stuff in it, but he would show us the rest of the property. He stated that he had a workshop in the back so we went to go look at that. As we are walking to the back yard he states that he also built "apartments" and he has people renting them. This man personally built 5 units in his backyard and was renting them out for $600 a month!! 4 of the units were stacked (2 story building, unit on top and on bottom) and there was one that was single-story. The units ranged from 1 bed 1 bath to 2 bed 2 baths with full living rooms and kitchens! The units had their own power meters and they were connected to a well that he drilled on his land. The makeshift apartments were not in good shape though, they were completely trashed from the past tenants, needed major construction work, and were definitely not up to code. The makeshift apartments didn't have A/C or heating other than window units and space heaters. The two-story buildings were described as "Storage units" and the single-story was actually registered as a single-family home (So he said). All the properties were claimed to have had the proper permits at one point but he didn't feel like keeping up with them. 

     From what he was telling my partner and me, he was making $600 rent for each "apartment" and $1200 for the actual home. He was making $4,200 a month in cash flow. That is the kind of creativity we need in this market! oh, I almost forgot to mention, he was asking $250,000 as is with all the tools, work equipment, furniture, cars, boats, appliances, and trash on the property. Honestly, if I had $250K just lying around, I'd buy it. This was all before we stepped foot into the house that we went there to see. 

What would you do in this situation? Have you seen anything like this before? What is the most creative thing you've seen on a property that created cash flow?  

-Eric