What do you get when you mix a few arrests, drug dealing and unpaid property taxes? My first BRRRR property that's what!
Back in early June, the city released their list of unpaid property taxes from the year prior. I took those 900 or so properties and narrowed it down to approx. 40 homes I would either be interested in bidding on the unpaid taxes or contacting the current owners about selling their home. I paid a younger agent in our office $150 to drop off a letter at each of the 40 homes.
He came back with one good prospect that needed to sell asap. They couldn't afford to pay their property taxes from the previous year. I went over the following day with a contract and put it under contract for $70,000. To put $70,000 into perspective, this home was located in a subdivision with an average price of $150,000, in a great school district and in the middle of town. The seller was facing some drug charges and needed money for a lawyer so needless to say she was very motivated. I asked the neighbors about the home owners and they didn't have very many nice things to say. They said they had been running drugs through the house for the past two years.
The next day I call to setup a foundation inspection and someone other than the owner answers the phone saying the seller was arrested that morning and she wasn't selling the property to me anymore. Apparently another investor met with the seller later that day and offered $15,000 more than me. I made my attorney aware of the situation and they recommended we record the purchase agreement in the public records to protect us in case someone tried to buy it out from underneath us.
That ended up being our saving grace. When their attorney did the title search they saw our purchase agreement and told the sellers their only option was to sell to me or face a 10% of the sale price penalty. The sellers did not have any money so this gave me the leverage to close the deal.
While trying to setup closing I found out the seller got arrested again. I wasn't sure where this put us for closing. I waited it out and sure enough she called me the day she got out and expressed her desire to sell asap.
We closed the deal and I agreed to let them stay for another 3 weeks to find a new place. They ended up staying 4 weeks but I was able to get them out eventually. The renovation went pretty smooth and we just posted it for rent. The entire process was very exhausting but well worth the headache in the end.
The numbers breakdown like this:
Purchase price: $70,000
Rent Price: $1,350/m
Here are some before and after pics:
Nice job @Stephen Hundley and great story! I love it when investors add value and make the places we invest a better place. Bravo my friend!
Thank you @Robert Leonard ! It feels even better meeting more of the neighbors and hearing the gratitude for getting the sellers out and making their neighborhood a safe place again!
What color paint did you use?
Manchester Tan by Benjamin Moore
Boom! That's awesome!
@Stephen Hundley do all cities come out with a list like this??
I believe so. I've heard some larger cities put out lists every month but Lafayette is only large enough for one list a year.
What a great post! What really stood out for me was the advice your attorney gave to you record the purchase price in the public records. That is new to me, I have not heard of this process before. Could you kindly explain how the recordation takes place, especially if no funds were exchanged?
Love the after photos, what are your plans for this house, to rent or sell?
@Grace Ng shows the importance of having an excellent attorney! I never would have thought of this on my own!
They went down to the courthouse and recorded the contract. I'm not sure what else went into bc they did it for me.
Plan on renting the house. Note will be around $900/m all in on a 20 year amortization and will rent for $1,350/m pretty easy.
@Stephen Hundley , Great thanks! What department would you even call? Tax Assessor the city? Is that who publishes the list?
sheriff's dept for us, possibly tax assessor in other places
One rehab tip that I noticed in your before/after pictures. I would have kept the cabinets and painted just like you did, but I would make one change. That scroll work over the kitchen sink is probably on a single board that can easily be removed and totally take that 70s-80s element out of the kitchen cabinets. It works either open or by replacing it with a straight board if you want/need to fill the space.
It works as is, just a personal preference. The work looks very well done. I need to get some contractor references from you.
@Robert Leonard We definitely would have put nicer finishes in it if we were looking to sell it. We tried to renovate with the idea we are keeping as a rental. Always like to get input from more seasoned investors like yourself! Thank you for the feedback!
Did you refinance (last R before repeat) to take cash out?
i'm still in the process of closing on the refinance but I don't plan on taking any cash out
Congratulations to you on your success! Hard work definitely pays off! The home looks awesome!
Great work!! Congrats.
@Stephen Hundley Congratulations and the rehab looks great! I have a question about the bathroom. Did you add the tile halfway up the wall, or was that already there?
Very Well Done!
great story! What parameters were used to narrow down your search to the 40 properties which you targeted?
Excellent work! What did you use to pain those cabinets?
Way to go!!! I think your hard work now will pay off for years to come!
Criteria from knowing my area. Great schools, great location, areas I know that buyers love. Nothing more than that really. Areas w low inventory. Areas that can absorb either a flip to sell or great property to keep and rent out.
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