My First BRRRR Property Successfully Completed!
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
Renovations: $27,000
Appraisal: $160,000
Rent Price: $1,350/m
Here are some before and after pics:
After: