This property was abandoned for years after the owner moved into a nursing home. Although the mortgage was paid off, there wasn't any immediate family to maintain the property or pay the taxes. Eventually the community got tired of the eyesore, and there were petitions to condemn and demolish the house. At the same time, there was an investment group paying the taxes on the property in order to eventually get a tax deed. I originally went through the family to try to purchase the property, but the owner was not of sound body and there was no power of attorney. I then approached the owner of the tax sale certificate to see if they would sell. Due to the redemption period nearing, they were unwilling. I consistently followed up until one day the city decided that the property would be condemned and demolished. At the point the owner of the tax sale agreed to sell me the certificate to offload their risk. I worked with the city to save the house and pull necessary permits for renovation. All in purchase price was $15,000 and the whole house renovation was about $85,000. The renovation included: Whole house replumb, new roof, windows, driveway, porch, landscaping, carpet, paint, ceiling fixtures, refinished hardwood floors, remodeled one bathroom and added another. The house appraised for $205,000, and my equity now serves as a HELOC. It is a rent by the room student rental that cashflows $500 monthly.

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

I found the deal while I was walking to class. I was a student at the University of Northern Iowa at the time, due to COVID and classroom changes I stated walking a different route. This was the only abandoned house within several blocks of the college and the university owned all the properties surrounding it. After walking past a couple times I was far too curious to let it go so I went to the country courthouse and got all the information I could. From there I chased every lead I could find.

How did you finance this deal?

The purchase price was so low compared to the value that I could use the property as a HELOC to fund the renovation.

How did you add value to the deal?

I added value to the deal by adding a bedroom and a bathroom, as well as a complete whole house renovation.

What was the outcome?

The outcome was $500 monthly cash flow and $100,000 of equity built.

Lessons learned? Challenges?

Many lessons were learned on this deal. Renovation mistakes, unnecessary costs, failure to keep receipts,... I was 22 at the time and I had been listening to BP for years. Naively, I thought that with a Bachelors in Finance and Real Estate and hours of podcasts consumed, that things would go without a hitch. That was false. I learned lessons in all areas of real estate investing, and I would advise beginners to underwrite a deal with a large margin of error. There is ignorance debt to be paid.