Not a Great Buy = $5K Profit

[Owen Dashner]

We don't buy MLS deals all that often, but we decided to buy this deal because of the great subdivision it was located in. This was a District 66 ranch in Omaha, and it was listed on the MLS for $150,000, which was underpriced in a neighborhood with houses up to $450K. So we knew there would likely be several offers above asking price. We ended up getting it under contract for $160,000, even though there were higher offers. We closed quickly with cash, so that was the reason the seller accepted our offer. We loved the neighborhood and the 1/2 acre lot the house sat on. We hated the layout, small bedroom size and lack of a master bath.

We had buyer's remorse after putting together a likely scope of work. It would be tough to make much of a profit, and the rehab would likely take $50K+ and 3 months. The biggest hurdle with this house was that the lot was right next to the Interstate.  

We ended up deciding to punt and just list the property as-is on the MLS. After about 10 days on the market, we accepted a cash offer for $172K with a 2 week close, leaving us with about $5K in profit.

The moral of the story here is, even experienced investors make bad buys sometimes.  If you make mistakes in highly desirable areas, you have a better chance at squeaking out a profit than if the property is located in tough part of town.

[Owen Dashner]

@Keaton M. thanks!  Lessons learned...  Be careful buying properties with unsolvable problems, and don't be afraid to cut your losses or accept a small profit instead of doing a huge rehab and making the same amount of spread.  The fact that this house was right next to the interstate was going to be a big deterrent for potential buyers, as was the layout and bedroom size, which would be really expensive to change.