Dream purchase at the sheriff sale

[James Warren]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $37,100
Cash invested: $54,200

Salem Warren Rd, my favorite project to date. Purchased April 2021 cash purchase $37k. Invested just under $18k. Totally different house! All in at $54k. This was our 17th purchase. Rented it November 2021 $1450 a month, tenant paying all utilities. Appraised December 2021 for $160k. Refinanced Jan 2022 $102k. Complete return of our cash invested. Additional $45k cash at hand and $58k equity left in the property, and a monthly cash flow of $400 plus a tenant paying off the 15 year mortgage

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

We’ve been buying rentals for a while, mostly single family. We’ve had to turn to the sheriff sales to find deals lately. This property made our portfolio 17 buildings/ 24 doors.

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

The sheriff sale. It was only our second purchase there. Opening bid was $25k we were willing to go up to $50k. Our winning bid was $37,100

How did you finance this deal?

Personal cash from savings. The renovations were also self financed. 9 months after purchase we did a refi, recuperating our full cash investment, plus a profit, plus equity in the property, an appreciating asset, and positive monthly cash flow.

How did you add value to the deal?

From the ground up- literally! Drain, fix and paint the basement. Replaced all waterlogged mechanicals. Added a driveway. Mold remediation, drywall repair/ replacement, paint, lights and flooring throughout. New kitchen and bathroom. Power washed the exterior and we were ready to go.

What was the outcome?

Tons of forced equity. The option for us to consider flipping vs buy and hold (for us the buy and hold always makes more sense). A great asset in our portfolio, recovery of an eye sore for the community, plus a beautiful safe place for a young family to call home.
I wish I could buy 10 more just like it!

Lessons learned? Challenges?

Challenge-When you purchase at sheriff sale you can’t view the interior prior to the sale. We were unaware that there was 6 feet of water in the basement until we bought it. (We did see the mold on the main floor through the windows). We learned that we can handle larger problems than we thought. We have since been looking at properties with more work needed knowing that if we just step by step say- how do we fix this, we can get through just about anything.

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

Yes. My husband and I. (This is Kelly writing for Jim). We are real estate brokers and investors in North East Ohio. 22 years professional real estate experience. Real Estate investors since 2017. We’d be happy to help anyone on the path to wealth building through real estate!