Short Sale Studio Condo Purchased and Sold

[Juan Calles]

Investment Info:

Condo buy & hold investment.

Purchase price: $110,000
Cash invested: $5,000
Sale price: $220,000

This was a short sale condo that I sold after about 3 years. I rented it out; however the association fees were higher a few years later so I decided to sell once the cash flow didn't make sense. Unfortuntely I was not able to do a short term rental on this due to the condo rules.

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

It was a short sale, so there was high probability of passive appreciation due to the location. There was about $300 of monthly cash flow which was nice for such a small unit.

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

I found it on craigslist, back in 2013. Honestly I think investors were focus on the bigger deals and this one feel through the cracks because there was low cash flow. The total deal took about 8 months, which Im sure people did not want to wait for, so I needed to be patient with the bank and seller. It was for sale initially for 225K, I offered 100K and we settled at 110K.

How did you finance this deal?

Conventional loan with 25% down.

How did you add value to the deal?

I was a strong buyer with good credit and good proof of funds. I also assured the agent that I was willing to be patient to have the deal go through (this was a short sale). During the middle of the sale one of the pipes burst in the condo and neither the bank nor the seller wanted to pay for the repairs, so I paid about $800 to have the pipes repaired and clean up the water damage. At that point all parties new that I was serious about the deal.

What was the outcome?

I purchased the property at 110K. I later sold the property for 220K. I sold it because the condo association was undergoing an assessment which significantly cut into the cash flow. I wanted to do a short term rental to increase the cash flow; however condo rules did not allow that to happen. When I sold the condo I attempted to execute a 1031; however the deal for the property I attempted to purchase fell through (city did not issue the CO and the seller did not want to fix the issues).

Lessons learned? Challenges?

Make sure to stay in touch with the condo association short term rental rules.
If executing a 1031 make sure you have multiple properties as prospects.

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

Frankly, there is no one that really stands out.