Purchased a vacant distressed home with a lot of water in the basement and everything associated with a home which had been abandoned for 7 years. We were able to breath life back into it and made it a welcoming home once again. Great success for our first project. Bought this tax foreclosure for $24K , put $85K (hard money) $25K (private lender) into it sold for $180K to cash buyer the first week it was listed.

I followed a lot of the suggestions from listening to the BP podcasts.

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

It was an off market deal that I brought to the attention of the City of Schenectady and asked them if they would foreclose on the house because I could not find the owner (he had passed away in 2012), nor any of this children. I found it by using the "driving for dollars" technique.

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

By Driving for Dollars technique. I purchased a county map for the areas I wanted to specialize in and starting driving about as many hours as possible when I wasn't working. I developed a proposal, presented it to the Mayor of Schenectady; they had to go through city council to approve this off market sale because it was taken outside of their Land Bank Process. So I negotiated with the City of Schenectady to buy it for the back taxes.

How did you finance this deal?

Use a hard money lender ($85K) who charged us 15% and an additional $16K is ALL KIND OF FEES I did not fully understand until later.
I also found a private investor ($25K) through my REI network -- we meet on a monthly basis.
Then I used a credit card to buy materials because of how the draw system worked with the hard money lender.

How did you add value to the deal?

This project was a 1950's Cape with strong bones,
New mechanical in the basement - new HVAC, Plumbing, Sump Pump, New electrical wiring, new roof, new 10x20 deck, new kitchen cabinets and appliances, converted from 4B -1 Ba into a 3B, 2 Ba - with a master bedroom suite on the first floor -- took out a few walls installed headers and created an open concept look to the home. Also added crown molding on first floor, including the master bedroom suite to give it an added wow factor.

What was the outcome?

I made about $50K -- spent about $25K more than I should.

Lessons learned? Challenges?

Don't let your brother do the rehabbing for you
Get multiple quotes from carpenters
Get materials list from everyone up front - go to Home Depot in a more scheduled manner
Know your numbers COLD when working with hard money lenders
Have your bookkeeping system set up before you start spending money

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

Yes. I had to list with another real estate agent, than the one I started out with because I wanted a 4.5% listing fee -- I refused to pay 6%. I shopped around until I found more value for dollar -- Traci Cornwall listed my house for 4.5%; had professional pictures taken after I staged it sold within the first week. Also, the first realtor insisted that the house should have been listed for about $160-$165; Traci showed me new comps that indicated the price point was closer to $189,000.