BiggerPockets

Description:

Long-time, well respected custom home builder completed a speculative custom home in a premiere Heath development in 2008. The timing could not have been worse. The housing market along with the banking and lending industry collapsed just as the home was ready for sale. The builder refused to discount the sales price enough to sale the home quickly. He has recently lowered the asking price to $799,000. Although the housing market is recovering, he can no longer incur the cost of owning this home, and will lose it to foreclosure. Recent sales activity indicate that this home can be acquired at a substantial enough discount to allow for an appropriate timeframe to market and sell at a discounted price while creating a significant profit for the investor.

Major Facts: •Similar homes in this subdivision sold for approximately $1,000,000 before market downturn •Current debt is $577,000 •Property is listed for foreclosure on September 1, 2009 •If marketed appropriately, home should sell for $725,000 Financial Summary: •Purchase note from Bank at Discount for $550,000 •$20,000 carrying costs over nine months (maintenance, utilities, marketing and taxes) •Total investment of $570,000 •10% return on outstanding investment •75% of net sales proceeds for Equity Investor •$85,000 profit, 22% projected return on investment for Equity Investor We were successful in taking control of this home without purchase.

We made agreement with builder to pay lender to postpone foreclosure and market for sale. Sold home for $670K in 40 days and was able to keep a profit of $30K.