My 7 Month Short-Sale Property Buy & Hold Story

[Michelle Theriault]

Investment Info:

Single-family residence buy & hold investment in Rowley.

Purchase price: $185,000
Cash invested: $50,000

This was a short-sale half duplex I had under contract for 7 months. It was listed for $169,900 originally so I was ALL OVER THIS property! I offered full asking and then the bank countered at $200K! :( I took extensive pics of the interior & exterior work needed on this neglected property and submitted them with a contractor price proposal. I offered $185K and the bank accepted! NO condo fee, and although the other side of the duplex doesn't want to sell, I have an AWESOME new home I owner occupy for LESS than it would cost me to rent AND I have tax write offs now, so I'M STOKED!!

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

Because I am a realtor, I understand the value of a diamond in the rough--a property that is damaged and very under priced.
This half-duplex/Townhouse had GREAT bones, it just was in desperate need of deferred maintenance repairs and a "makeover".
It's in a fantastic area off the highway and to me it was and is a real GEM!

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

Believe it or not, I found it on MLS looking for a small condo. Ultimately I wanted a multi-family property but knew I didn't qualify "on paper". After I got honest with myself, I immediately wanted to bargain hunt the market to see if there were any good deals on MLS. Found this property the FIRST day I looked, had only been listed a few days. It's on septic, so Title 5 was "the buyer's responsibility"--that didn't scare me. I represented myself & got it under contract w/listing agent ASAP

How did you finance this deal?

I was able to get conventional financing and put 20% down to avoid paying PMI.

How did you add value to the deal?

I worked with my neighbor getting 2 contractor quotes for exterior work. Her guy literally came in below half what my guy quoted so we went with her contractor. He & his guys did an AMAZING job of removing all the rotted old wood trim around the windows, replaced only what was necessary with new wood, added new PVC crown moulding & soffits, new gutters & painted the entire house and added shutters. My GC friend installed new kitchen cabinets, refinished HW flooring, painted walls, new bath.

What was the outcome?

Now it is a completely updated property interior and exterior and I LOVE IT!! When I bought it for $185K, it had already appraised at $205K despite being in really rough shape. So now it's worth $250K with granite kitchen, bath and fireplace, & everything we did to it. I could NOT BE HAPPIER!!

Lessons learned? Challenges?

Don't get so emotionally involved in the deal, I broke my cardinal rule by falling in love with this place even though as an agent I know better!! Because this was going to be my primary residence and there was NO CONDO FEE, I had my heart set on this place. It was a roller coaster ride because the sellers were very difficult to work with, it was a short sale and they were losing their home rightfully so.

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

Luckily I was able to represent myself as the buyer and buyer's agent so getting that commission check definitely softened the blow financially on closing costs. Brian Mahoney in Wakefield MA with Guaranteed Rate (formerly GMH Mortgage in Danvers MA) and his team were paramount in making this deal happen with my financing.