From Ugly Duckling to Belle of the Ball

[Karla Munguia]

Investment Info:

Single-family residence other investment.

Cash invested: $6,000

This property was my late in-laws residence. The property was inhabitable and required over $100,000 in repairs, including foundation and retaining walls work. It was a nightmare --taxes in default, code violations, illegal activity ... you name it. The easiest option would have been to sell but my son and I struggled through it. The hardest part was qualifying for a conventional loan so we could repair and hold. Now the property is worth about $600,000.

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

This was primarily a transaction fueled by principle and emotional attachment. A lot of my in-laws history was attached to this little house in Los Angeles, and I wanted my son to learn that trans-generational wealth is a sound concept anywhere in the world. Because he took heed to my advice, he now has a beautiful asset that cashflows and has added quite a bit of equity, improving his net worth substantially. Now is time to repeat the process.

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

The property was bequeathed to me by my mother-in-law as her Successor Trustee.

How did you finance this deal?

My son qualified for a conventional loan for purchase and rehab.

How did you add value to the deal?

On top of re-doing everything, we added 1 more bedroom to maximize the use of the small lot. Later we spent money on landscaping the property professionally, which has been one of the best moves.

What was the outcome?

We went from a property where I received a $25,000 cash offer, to a property now worth $600,000.

Lessons learned? Challenges?

Doing the right thing does not make economic sense sometimes. Struggling through the process of rehabbing this property taught me more than just adding to the bottom line. Leaving and preserving the economic family legacy was a priceless lesson.

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

Yes! My general contractor was an angel. We were blessed to find someone with his integrity.