My first Sheriff's Sale purchase

[Tai DeSa]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $86,965
Cash invested: $1
Sale price: $167,829

This was my first Sheriff's Sale purchase. I made two big mistakes: 1) Without due diligence, I ended up spending $24,000 more on the renovation than budgeted, and 2) My asking price was too high and I chased the market down as the housing bubble burst. One thing that worked in my favor is that I had a cash investor who contributed 100% of the cash into the deal. We were lucky to get out of the deal with only a $1,700 loss.

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

I bought it at the Sheriff's Sale.

How did you finance this deal?

A busy business owner agreed to invest 100% of the money for the deal as long as I did 100% of the work to find it, manage the renovation, and sell it.

How did you add value to the deal?

We dramatically improved the home with a $64,000 renovation.

What was the outcome?

We sold it a year later for what we had into it. The total loss was $1,700. The housing bubble burst right after we bought the home, and we were lucky to sell it with only a minor loss.

Lessons learned? Challenges?

We budgeted $40,000 for the renovation but went $24,000 over budget when we discovered wood rot behind the walls. We did not perform our due diligence. We also priced the house too high (we started as a For Sale By Owner at $215,000) even though the housing bubble was bursting. We were overly optimistic on the eventual sale price and on the renovation costs.