Turning Crap Into Cash

[Josh Caldwell]

I just completed a deal in the bombed out part of Alliquippa PA, its a great little town for turning out NFL talent but it is a pure war zone for real estate. 

The core of this deal is a solid brick 4 bed 2 bath house that hasn't been lived in for at least two years.  The house had a lot of mold growing on the top floor, a roof leak, dog feces on the carpet, cracked and broken windows, and most importantly a motivated seller. 

The poor guy grew up in this house and he has concluded that being a landlord is not for him, did I mention the dog crap?

I found this house by tracking expired listings and yellow lettering the owner.  The house was listed at $10,000.  Did I mention that this property is in a war zone?  So I wanted to help the guy out.  I didn't bother haggling on price, I wanted good terms.  So my offer was $10,000 paid as $300 per month at zero interest until paid, with the first payment due in 6 months.  He quickly accepted.

Then with contract in hand, I marketed the property as a "handyman special" with 100% owner financing.  It took 3 weeks of tenant screening to find a guy with a steady income, crap credit, and handyman skills.  He is now fixing the house up on his own dime, while paying me $500 per month at 5% interest for a total of $30,000 in principal. 

If he completes the transaction, I will net more than $20,000 for a house that most investors would touch.  If he fails to complete the payments, I will take an improved house back from him and make more money.  The title will stay in my name until he pays me off, so I will evict him like a renter if needed.  In my state that takes about 30 days.  I will be inspecting his work every 30 days or so and he has to meet certain progress or he is in violation of my contract and out he goes.  So the pressure is on him to improve my house.