Take out of sheriff's certificate of sale nets $85,000 on terms

[Craig Markhardt]

Investment Info:

Single-family residence private money loan investment in Sioux Falls.

Purchase price: $85,000
Cash invested: $75,000
Sale price: $245,000

Redemption property purchased after the sheriff's sale. The 1953 ranch style home with 3 br and 2 ba had 20+ years of deferred maintenance and was in immediate need of attention. Posted for sale on Zillow and found family that to buy it as finished with total gut rehab and adding two bedrooms in lower level for $245,000. Significant repairs are being completed now and buyers have contributed large down payment and I am financing them on contract with a 30yr term loan and no PPP.

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

This property needed a new owner who could put large dollar improvements into it. I had the experience, team, and finances available to put into the deal.

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

I have followed this home since it was Lis Pendens, went to the sheriff's auction but did not buy it at that time due to it getting bid up higher than it was worth. I approached the owner, negotiated, and took out the sheriff's certificate of sale and am using excess funds to make the improvements the former owner had been unable to do.

How did you finance this deal?

$2,500 down payment, obtained deed and then financed for the remainder to pay off the seller's debt and provide additional proceeds through a construction loan.

How did you add value to the deal?

Removed debris and overgrowth on property, new siding, windows, exterior doors, total gut of interior including removing walls and re-engineering structure to support roof trusses and ceiling joists, rebuilt staircase to accommodate new kitchen design, replaced entire block foundation wall that was heaving inward, replaced sewer drains in entire home including underground, drain tiled, and rebuilt both bathrooms and prepared current garage to be remodeled to become master bedroom and bath suite.

What was the outcome?

Buyer is currently on site making significant progress and construction is approximately 50% completed as of 8/10/20.

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

I worked with an experienced real estate and litigation attorney.