Small Town Buy With Value Add All Over It

[Matt Smith]

Investment Info:

Single-family residence buy & hold investment in Kenedy.

This Auction was for a 4/2 on oversized corner lot with an additional 2000+ sf of warehouse space for great price in rural town in Texas. Still vacant, but worth the wait. This was purchased during the bottom of the Real Estate market crash.

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

This was/is an ugly house purchase. The attractively low price, oversized lot, and tons of concrete improvements made this acquisition a no brainer.

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

I found this deal online during the shadow inventory dump years. It was an REO offered on an online auction site. Negotiations were very difficult mainly because I had won, or thought I won, the auction 3 times in a row. As soon as my offer was submitted with seconds left, the auction was extended automatically, and I would be informed later that I had been outbid. All three times I never increased my max, but several months later the auction holder contacted me to strike a deal on my offer.

How did you finance this deal?

This was an all cash purchase.

How did you add value to the deal?

To date, no improvements have been done; however, due to the existing improvements, value and perceived value have been on the rise.

What was the outcome?

This is still part of my portfolio. Plans are in the works to convert, remodel, into multi-family and lease out for long term hold.

Lessons learned? Challenges?

That sometimes no in real estate means "no for now." I had tried to acquire this property for a year, or longer. After every auction, I would be "outbid" only to see it relisted several months later. Finally, when my offer was accepted, there were legal implications the took another 6-8 months to settle. I'm convinced most investors would have given up, but persistence to see it through has provided for a very valuable property, and experience to boot.

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

There were real estate agents involved during the first attempts at acquiring, then all communications shifted to a law firm representing the bank that owned the property.