Former Boss' Home FSBO in Desirable Neighborhood

[Zuriel M.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $58,200
Cash invested: $15,000

1100 square feet SFR, 3 bed, 1.5 bath.

What made you interested in investing in this type of deal?

Home was in desirable neighborhood that I knew would yield very high cashflow against potential 3% loans. Former boss didnt want to deal with the home repairs after it flooded and decided to just break even after unsuccessfully trying to sell it as turnkey before the damage.

How did you find this deal and how did you negotiate it?

Former boss called me because friends told him I invested in fixers. I offered to coordinate the paperwork and take care of his monthly payments until closing (1x payment was made before closing, I think I shouldve done that through the escrow). I told him all he had to do was show up to sign for the deal at the title company and I would make sure his loan gets paid-off.

How did you finance this deal?

HELOC from another house that had over 90% equity.

How did you add value to the deal?

Cosmetics. The home floors were removed due to flooding from broken shower plumbing.

What was the outcome?

A home that is marketable due to its very desirable neighborhood and privacy from cul-de-sac.

Lessons learned? Challenges?

Subcontractors were not doing work, running up the clock to pocket the hourly cash and when they did work it was very inaccurate. GC had to fire all of them and ended up doing the work himself. The paint had to be redone resulting in very thick layers that prevented doors from closing, which then I hired a different handyman to fix the issues behind the subs and what GC didnt catch. From now on, no GCs. Specialists will be assigned per one job category.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Title company gave me any information I needed on which papers to use. I used insurance that would cover it during vacancy and repairs due to potential findings with the flood damage, then switched after renting to cost-effective insurance I use on my other units for more cash-flow.