First of all I would like to say “thank you” for such a great site to share and gather information on such a great business.
We started this business just three and a half months ago by the advise of a probate attorney (and licensed real estate broker) who my wife was doing part-time work for. Within two weeks of sending post cards to trustee sale listings in the newspaper, we received a call back from a distressed owner. (Our attorney/partner advises to look for distressed owners, not distressed properties.) She only had about ten days left before the sale, and she was desperate.
We asked all of the pertinent questions and then asked her how much she was looking to sell the house for. She said $90K. We met her the next day and viewed the property. That afternoon we did our due diligence looking for any other liens, etc. on the house and found out that her arrearages are approximately $6K.
We called her that evening and told her we were prepared to make an offer. So the next day we offered her $51K which included all expenses including $2K back to her. The offer also included a three-month lease back to her for half of the going rental rates in the area. (This was important to her as she had nowhere to go.) She signed before we left. After the five-day right of refusal, we notarized a deed in our name!
Two months later we have “refied” the house which appraised (in it’s current condition) at $85K at an 80% LTV. We will pocket over $15K on this and still have 20% equity in the house in its current condition. The good part is we will keep this home as a rental and have a positive cash flow of $250 to $300 per month! This was our very first deal. Not bad.
On our second deal, we received a call from a distressed owner of a foreclosure three months after we sent him a card. (They filed bankruptcy.) He was desperate since his sale was happening in six days. After inspecting the property with our attorney/partner we were prepared to make him an offer, but he was bent on a price tag of $180K, so we let it go to auction.
We partnered our money with our attorney and another investor he knows, and we showed up at the sale. We purchased it for $101K. What a thrill that was. The property is worth approximately $210K because it has a main 2/1 and a granny 1/1 and an 800 square foot shop. We will flip this one after we evict and split the profit three ways!
We are now absolutely addicted (the thrill of the hunt) to this business. It is my goal to quit working for my employer at the age of 40 which is in four short years