All Forum Posts by: Chris Pohlson

Bigger Pockets has been instrumental in helping me get my REI business off the ground. I would have never been able to complete this transaction without the help of the BP community. The seller of this house found me through a cash offer advertisement I had posted on craigslist. I was super scared to buy it after the inspection and I almost let the deal walk. I'll never forget pulling up the carpet and watching bugs and worms scatter! Thankfully I had some great colleagues in my network that encouraged me to move forward.

Before

After

Here are some quick numbers:

Purchase Price: $10,000 (negotiated down from $15,000 asking)

Rehab: $35,000

ARV: $75,000

Rent: $880/mo

Closing/Holding Costs: $2500

Projected monthly cashflow (unleveraged): $500/mo for a 12.5% cash return

If all goes to plan, I'll be able to refi after my 6 month seasoning and get all my money back and still cashflow about $266/mo.

I'm happy to share more details if anyone is interested.  

I'm so grateful for this community!!!  THANK YOU!

@Graham Zomermaand  You will need a cosigner if you're looking for traditional lending.  Can you wholesale it?  Can you bird dog it?  

@Mindy Jensen Thanks!  $18,000 was the amount I wanted the foreclosing "bank" (it was actually an oil company) to pay me as a settlement in order to not contest their redemption rights.  

I just walked the property today for the first time.  It's actually in pretty good shape.  I've got some electrical to update and minor repairs (soffit, gutters, etc...).  It's a 3/1 and market rent is probably $750-$800.  The current tenant is signing a 6 month lease for $650/mo.  The plan is to increase to market after 6 months.  Here are some rough numbers for my expenses so far:

Purchase price: $1+$25 recording fee

Back taxes: $2300

Legal fees: $3000

Rehab estimate: $5000

Tax assessed value is $66k.  Real world I'd probably get $45k-$50k for it in today's market.

It might sound like a stretch but my goal is to build my portfolio up enough to where I can get on BP's podcast and tell this story as part of my journey. It's been a blast and I've fallen in love with REI!

My high school music teacher, Merlin Schneider, was from Wapello, IA.  No joke.  Buying low income properties doesn't make you a slum lord.  Neglecting them does.  

@Todd Fithian Thanks!  The Mrs. came around :)

@Tony SanFilippo I appreciate it.

After 6 months of ups and downs, I can officially say my real estate investing career started with a house I bought for $1.  BP has been such a huge help getting my investing career off the ground, I thought I'd share the story.  Here's a quick recap of my last 6 months with this deal:

03/23/16: Went to foreclosure auction to figure out how it works.  Bid $1 and won a property.  My wife was p*ssed.

3/24/16: Found BP and posted this thread: https://www.biggerpockets.com/forums/311/topics/29...

04/01/16: Filed certificate a sale despite most of my friends, family, and coworkers telling me it was a bad idea.

05/01/16: Paid my first lawyer bill (yikes!).

06/10/16: Got a call from the original lien holder's lawyer saying they wanted to redeem.

06/13/16: My lawyer and I say lien holder has no right to redeem.  Lien holder offers settlement in lieu of me fighting their redemption.  Negotiations commence.

8/16/16: Closed on two other properties in large part thanks to what I've learned on BP.

9/16/16: After months of back and forth I'm at $18,000 and lien holder is at $3,500 for settlement.  I let them know I was ready to go to court.

9/25/16: Tenant that lives in the house came to my door freaking out because she was afraid of being evicted once I took ownership.  Worked out a deal for her to stay. (she's not the foreclosed debtor)

Today: No redemption was attempted and paperwork filed to make the transfer of deed official.

Thank you BP community and founders!  Here's hoping it's not a money pit.

Whatever you do, don't advertise at $800, $700, or $600.  Think $795, $695, $595.  Pricing psychology is real.

Make your tenant responsible for snow and grass.  You might be right about taxes.  Check with your CPA.  

Look up your county plat map.  That will show owner and primary address.

Questions and thoughts: Insurance seems a little high. You budget for maintenance but not for Capex? I assume you're going to manage it yourself.

If I evaluated that property I would use 8.33% for vacancy (equivalent to 1 month's rent) and another 5% for Capex. That would put your monthly cash flow at a little less than $100/mo. If you put $15k in (down payment and closing costs) that would give you a CoC return of around 8% based strictly on cashflow.

Everybody's criteria is different.  Could you find something better?  Maybe.  Could it take you a while?  Maybe.  Should you get in the game sooner than later?  Yes.  

Good luck!