$35,000 house with $730+ in cash-flow

[Caleb Bryant]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $35,000
Cash invested: $35,000

My business partner and I bought this property in Athens, Alabama (submarket of Huntsville). We were able to pick it up at a steep discount. We had a couple of options for exit, the two main options being a BRRRR and a wholesale. We ultimately ended up selling the property through a contract for deed. We receive $731 and change in cashflow on this particular property. Before the buyers moved in we helped them find someone to fix the leaking roof, otherwise the property was move in ready.

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

The main interest was the price versus the ARV. We bought it at $35,000 and the ARV was around $125,000. It did need some repairs, but was a very livable property as is with the exception of on corner of the roof leaking.

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

This deal came in through our marketing efforts. The seller was motivated so there wasn't much negotiation. We helped the seller remove all her personal property into a storage facility, and she now rents a home instead of owning her own.

How did you finance this deal?

Cash

How did you add value to the deal?

We didn't add value beyond the deal itself. All we did was connect with the buyer, purchase it, then sell it.

What was the outcome?

The outcome has been amazing. The monthly payments come out to 25% COC with no leverage. Our buyers make their payments early every month and are excited to own their own home.

Lessons learned? Challenges?

Lessons learned: Always pay someone else to do the clean out. I did gain some muscle but put two days of work into helping the seller move. I don't regret the time spent though because I built good relationships with people who needed help throughout that timeframe. The biggest challenge was the roof leak. We were unaware of the leak because it did not rain throughout the purchase process. When we were selling we found the leak, and agreed to help the buyers out with the problem.

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

No lenders or agents were involved in this transaction.

[Jay Hinrichs]

Originally posted by @Caleb Bryant:

@Taylor Chiu 90,000, 30 year term but they will refinance before then mort likely

@Jay Hinrichs always an option!

you can do a note BRRR.. I did this in my timber days.

typical deal went like this.

buy 40 acre timber track for 250k cash.

Log it get 225k to 300k in NET timber revenue  and then replant i

get building permit  cost 10k

resell for 250 to 300k on terms..  usually though a 5 year call.

go to my bank and hypothecate the note at bank rates  1 pint 6% for 50% of the of the note value lets say 250k note.

pull 125k in cash in.. the payments to me still had a nice chunk of delta in them. since my rate was usually 8 to 10%  

use the cash to buy another timber track.. enjoy the delta.. and when the buyer finally built he paid off my 250k note giving me another 125k in cash and paying my bank off.. 

we would buy the timber track and have 100% of our money back in 90 days.. Just love Timber  LOL.. its tight in this market now that was then when it was still under the radar for most.. but my old partner still makes 500k a year or more doing this.