Foreclosed Log Home to Vacation Rental

[Jeremiah Noll]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $87,000
Sale price: $225,900

Foreclosed log home being marketed very poorly gave us the opportunity to add value.

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

I had a buyer request a showing on this poorly marketed foreclosure. The agent had taken poorly lit photos of the property before it was cleaned up and the bank selling it did not care to make simple improvements which would have had it sold much higher. That buyer decided not to make an offer, but I knew some investors I could pitch the deal to. It was for sale at $99k and we negotiated them down to $87k.

How did you add value to the deal?

The house is a true log home which had 1 actual bedroom and 1 and a half baths. We converted the half bath into a full, closed off a section of the loft as a private bedroom, cleaned up the walls, added stone to the brick fireplace, refurbished the cabinets, replaced the counters, installed new flooring and lights throughout, custom build a porch swing, some landscaping, and then operated the property as a vacation rental for 6 months.

What was the outcome?

The property was sold as a turnkey vacation rental and still operates to this day in the same form. They have many 5 star reviews.

Lessons learned? Challenges?

Finding a buyer with a lender who will accept a log home can be challenging. You never know if the appraiser will be competent enough to compare the house to other log homes or to just regular stick built construction. We were fortunate to get this one sold to the first buyer. However, if we had held it for another 6 months we would have had another $50k in appreciation because of the quick rise in market values.