A Cross Between Fix/Flip And A Wholesale

[Brigham Pyron]

Investment Info:

Single-family residence fix & flip investment in Covington.

Purchase price: $25,000
Cash invested: $30,000
Sale price: $76,500

Large older brick home in need of medium rehab in all areas. Has 3br/2ba with large den/fireplace and carport that could be enclosed easily for a garage.

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

This one fell into my lap because I like to talk. Before I was employed, I bought/sold stuff on ebay, Amazon, etc. One day I went to buy a drop ceiling speaker (bought $25, sold $175). The seller and I talked for a bit. I started to mention that I did real estate. Before I could finish he asked if I did rehabs. He had inherited a house and sold it with owner financing to a man who'd stopped paying 4-5 years earlier. He offered to sell, but I quickly realized that I needed to buy the loan.

How did you finance this deal?

After some simple negotiation, he agreed to $25,000 to sell the loan. I sold some of my ROTH IRA stocks and transferred the money to a Self Directed IRA Custodian. They bought the mortgage for my ROTH.

How did you add value to the deal?

I foreclosed, filed a disposessory, and got the guy out. After quite a bit of dragging my heals (I had finally gotten a job again and was learning the new job), I hired some people to come clean out the home and cut the grass/weeds. My ultimate decision was to not rehab it since it was a funky floor plan and more that it was nearly 90 minutes away from me. I just wanted to clean it up a bit to be more presentable.

What was the outcome?

We listed it for $90k and accepted an offer for $76,500. After paying attorney fees, clean up work, back property taxes, & RE commission, I figure my IRA made a $40,000 return this year on a $30,000 investment.

Lessons learned? Challenges?

I really don't want to do a rehab far from home. Paint and carpet, OK, but more major, no.