Auction Purchase to Buy/Hold

[Ian Stewart]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $120,000
Cash invested: $40,000
Sale price: $200,000

Purchased property at foreclosure auction. House had some piping and electrical missing and minor cosmetic repairs that were needed. After fixing up, rented the property for a couple of years and ended up selling to the owner occupied tenant for an $80k profit (not counting rental income over 2 years.

Initial Investment: $40k
Purchase Price: $120k
NOI: $16,800 Annually
Cashflow: $8,400 Annually
Sale Price (2 Yrs Later): $200k

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

Neighborhood was appreciating rapidly and was purchased under market value because it was purchased at auction. After running the numbers figured the rents would be close to double the loan costs.

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

MLS

How did you finance this deal?

FHA 203k Loan (home renovation)

Lessons learned? Challenges?

How to manage contractors.
How to screen tenants (eventually handed off to property manager)