Real Estate Investing Basics

A Family Recipe for Buying Houses at the Courthouse Steps

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buying houses at the courthouse steps

Not much has changed on 5th Street in Belvidere, Illinois.  My grandparent’s house looks almost exactly the same as it did when I was 8 years old.  The wood-paneled walls in the basement are still there.  Family pictures remain in the same place.  The single bed in the upstairs loft, where I slept on during my summer visits, is next to the dormer window just like it was 30 years ago.

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My Grandfather is there too, sitting in his easy chair looking out the large picture window.  He’s on the alert for any squirrels attempting to rob the bird feeder in his front yard.

Whenever I visit my grandparent’s house it’s like a trip back in time.  Hearing the creak in the stairs as I make my way down to the basement takes me back to when I was a kid. 

It reminds me of those steamy days we spent at Boone Lake.  My brother Curtis and cousin Adam were hot, sweaty and dirty from swinging on the maypole and baiting our fishing hooks with earthworms.  As soon as we got home my Gramma would send us to the shower downstairs to get cleaned up for dinner.

The aromas emanating from that house bring back wonderful memories too.  That’s because my Gramma is an amazing cook.  Her coconut cream pie will make your mouth water.  No bakery can match her chocolate chip cookies.  And her pancakes are the best I have ever tasted. 

But the most fantastic smell to come from my Gramma’s kitchen is chicken boiling on the gas stove.  It can only mean one thing – chicken and dumplings.

This delicious dish is a four-generation family favorite.  A few years ago my Gramma showed me how to make them.  Surprisingly, the recipe is fairly straightforward.  The ingredients include a chicken, eggs, salt, pepper and a few cups of flour.

The best recipes are like that – simple and wildly popular.

I’m often asked about our system for buying houses at the courthouse steps.  The truth is my business partner and I don’t really have a system.  It’s more like a recipe.  With as many as 500 houses going to auction a day here in Maricopa County, Arizona it’s crucial for us to know what ingredients are needed before we go to the store.

To start, we only bid on single-family detached houses.  They must have a minimum of 3 bedrooms, 2 bathrooms, a two car garage, tile roof and be built with frame wood.  Retail value can range from $200,000 to $500,000.  The process of sifting through the long list of houses that go to auction every day becomes less overwhelming with this criteria in place. 

Once we determine a retail value for the property, back out estimated repair costs, holding costs, closing costs, commissions and profit, then it’s fairly simple to establish a maximum bid.

We sold a house two weeks ago using this recipe and net a $31,000 profit.  It was a standard fix and flip rehab – carpet, paint, appliances, blinds, ceiling fans and light fixtures.  About $9,000 total.  We put 25% down and used private money for the rest of the $157,400 winning bid.  The deal required $51,000 of our own money.  It sold 44 days after we acquired it at the courthouse steps.

Now that is a tasty treat.  It’s certainly not as satisfying to my belly as a plateful of my Gramma’s homemade chicken and dumplings but it sure does make the bank account feel full.

    Jeff Morris
    Replied almost 9 years ago
    It would definitely help the buyer to know. What matters do take care of before buying home or even selling to get a good buyer.
    Jeff Morris
    Replied almost 9 years ago
    It would definitely help the buyer to know. What matters do take care of before buying home or even selling to get a good buyer.
    Parv Harry
    Replied almost 9 years ago
    Thanks for the article. I really enjoyed it. The information / formula you mentioned in the article is very useful. Regards
    Dustin Fiehl
    Replied almost 9 years ago
    Interesting post and comparison there, Marty! Gramma’s recipe to a system in buying and selling houses – tested, simple, yet always leaves us full and satisfied!