Problems? Problems are opportunities!

[Will Fraser]

Investment Info:

Other other investment.

Purchase price: $180,250
Cash invested: $180,250

Contributors:
Alejandro Siguere, Hugo Urbina

This one isn't your average cookie . . . we bought an old farmhouse smack dab in the middle of an area we love and are doing some redevelopment.

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

This was a property that has so much charm and potential it was hard to say "no" to. Initially it was something I was helping a buyer purchase and it took their cost of living down to about $800/month using a low down payment conventional loan, subsidized by the income from the garage unit. Insert grenade into equation and you'll have a good understanding of how a deal can blow up, but it provided an opportunity.

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

It was on the open market (MLS) and we did the thang like a normal purchase . . . full asking price, subject to inspection, etc.

How did you finance this deal?

Therein lay another opportunity. . . the ADU was not legal, so the appraisal could not be completed and the bank could not fund the deal. So . . . we took it down in cash and will be refinancing out.

How did you add value to the deal?

We purchased the illegal setup and are doing some light renovations to the farm house, splitting the lots, and (eventually) developing the third lot that will be produced from the lot split.

What was the outcome?

7 weeks after purchase we will have 3 parcels, one with a 1 bed/1.5 bath garage unit renting for $650/month, another with a 2,200 square foot farmhouse renting at $1,250/month, and the third parcel is an empty lot. We can sell the lot, develop it, or sit on it and look at the pretty grass.

Lessons learned? Challenges?

Always consider the "worst realistic outcome" and make sure you are comfortable with that. If so, labor to achieve the best possible outcome and know that you'll be satisfied either way!

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

Troy Dee at Golden Land Surveying and Bruce Stone, City Manager were incredible to work with. They both made a new process filled with odd steps very clear!

Wes Anderson at Valor Bank was, once again, just phenomenal! He adds value every time, not with simple loan junk, but with a consultant mindset and a value-driven approach to lending and partnership.