Escalation Clause Craziness

[Owen Dashner]

Investment Info:

Single-family residence wholesale investment in Omaha.

Purchase price: $156,200
Cash invested: $200
Sale price: $200,000

Contributors:
Angela Thiel, Brandon Tauber

This market is nuts. This was a dated, but livable ranch house in a popular area in Millard, a suburb of Omaha. We bought the house directly from the owners from a direct mail letter we sent. We bought it as-is and turned right around and listed it for sale without even touching it. Multiple offers with escalation clauses later, we sold it for $200,000, which was $20,000 above asking price. Crazy!

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

It was a cosmetically dated, but solid starter house in a desirable school district. This is my favorite type of buy.

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

We sent a batch of direct mail to an equity list in the zip code this house was in. We went back and forth a bit with offer/counter offer, in the end settled on $156,200.

How did you finance this deal?

We used our line of credit to buy it.

How did you add value to the deal?

We cleaned it and mowed the lawn, and that was about it.

What was the outcome?

The house sold for $20K over asking price with multiple offers, escalation clauses and personal letters written to us. The buyers even agreed to eat the difference if the house didn't appraise for the sale price (and it didn't).

Lessons learned? Challenges?

Make hay while the sun shines I guess? This again just highlights the extreme lack of inventory of quality starter homes in good areas. I'm not sure how much longer this is going to last, but it sure makes it easy to sell when you have a good deal.

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

Angie Thiel with BHHS listed and sold it for us. 5 Points Bank for the financing.