Who Among All of You Work on Distressed Properties?

[Toyin Dawodu]

Please comment below who are interested in Distressed Properties, buy or sell them, etc. Why did you choose working on those properties? Let us share insights.

[Chris Simmons]

I buy distressed because i can build the equity by rehab vs paying for it in cash.

Here are rough numbers from a house I just closed on the refi of this morning in Tulsa.

ARV = $75,000

3 bed, 1 bath, 1 car garage....1000 sq ft

purchase price $41,600

After closing costs and rehab, I had $53,000 invested.  I just did the cash out refi and it appraised at $75,000...rents for $750.

For $53,000, I got a $75,000 house, rehabbed to my specifications, that rents for $750/month.  As I mentioned, I just closed on the cah out refi this morning (the last cash out I can do by the way).   With 75% of $75,000, I got a loan for $56,250 at 4.375% for 30 years.  After closing costs, I netted $52,695.60.  That leaves me with $305 of my own money invested in this $75,000 house with $20,000 or so of paper equity and positive cash flow.

If I wanted to just go up and buy a turn key version of this house, I would have to invest $15,000 down plus closing costs.