We began buying houses through tax sales four years ago. Although we have bought some large leins, the houses we have gotten have all been lower end homes. I know there is a lot of debate about lower end homes but our experience has been great. We were flipping until March of 2014 and began renting and selling some with lease options at that time. We now have 13 rentals and 2 more which should be finished in January and rented in February. We buy fixer uppers including houses on demo lists and condemmed lists) Our purchase prices range from 3000 to 25000 depending on the house but all end up being worth between 45 and 70K at the end. Our goal is to not be in over 35K on any house and our general rent is at 700 although we are moving that up and the last few average about 740 a month. Generally these houses have no central air, and no dishwaher and we do not provide clothes washers and dryers although all have hookups for them. Most all have garages. We find that rent does not move much for a garage, dishwasher or central air so skip them to keep investment and capital replacement and repairs lower. We have had one bad payer and one foreclosure on a hosue sold under land contract. (We have sold another 15 or so houses above the 13 rentals we have.
So the newest deal. We got a call from an ad we have here on bigger pockets to look at a house that was inherited and no longer wanted. We currently have it under contract at 26K. A little higher than our 25K range but we moved it up as the family had other houses to sell as well. As part of that we have under contract another three houses at 17.5K a house. All three have current paying renters. All three are a bit dated as well but no urgent maintenance needed. Only other caveat is that rents on them are low. We already own houses in the neighborhoods though so expect to get rents to average above 700 per unit. So will have to work them up over the next couple of years. We expect to get an ROI of between 17.5 an d19.5 (unleveraged) on this set of four houses. We find we can stay above 15% if we are not in a hurry to find new rentals. These are even a bit better than that. There are lots and lots of houses out there that are great deals. You have to look at a lot of them to find them though. Good deals are all over. Great deals are a bit more rare. Also we have found that lots of people are interested in real estate, but you can't actually make any money in it until you actually do something. This has been a great four years. We have learned a lot and no doubt have a lot more to learn and are looking forward to it!
Great work, keep it up, inspires us all.
Very impressive run over four years. I assume you do this full time? Just curious what you did before you got started and how did you transition from that to real estate full time?
Great job, very inspiring.
@Joe Splitrock I was a full time accountant until February 15th of last year. Which meant working nights and weekends on houses for quite awhile. Suprisingly I do less actual work on the houses now as I have found good contractors over that time and after working through many contractors that were less than ideal. I have done a lot of tax work (in accounting) over the last 20 plus years which has really helped in knowing how I wanted to structure what we did and how to track things. (I am working on 2015 taxes this morning) I sure don't miss tax season this year! :)
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