Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
I thought you might be interested in seeing a remodel project that I recently completed. It was the first remodel I have taken on in a while and I found it very rewarding from start to finish. One of the coolest things about the project was I bought this house in Lafayette, CO (Boulder County) for $10.
It goes back to my early investing days of buying on terms. I did a bunch of sandwich lease options but this project involved using a land trust.
I'm considering doing a class or some sort of course. Would any one be interested in that?
Wow Sheila, that is really impressive. I don't think in California and that too in Orange County we can ever have that kind of luck...... but never say never right. I would love to learn more about the land trust and how much it costs and everything. Please keep me posted.
Also if you can share how did you find this deal that would be much appreciated. Thank you.
Wow that sounds super cool @Shiela R.! Sounds like youre getting into something I havent heard of yet. Therefore, I would be super interested in learning more. Congrats on the project! I have family that lives in Lafayette near the Golf Course.
Oh thanks @Richard Phillip Lewis :) It's one of the many ways to buy with no money down. Pretty much has been impossible in our fast moving, low inventory market here in Boulder County.
The house was a stones throw away from Waneka Lake and right by Indian Peaks Golf Course.
It was a rare, perfect mix of wants and needs. Past clients wanted to sell and I knew they could get a higher sales price if it was renovated. However, they had relocated to Amsterdam so they didn't want to manage a project from afar. Since, managing a remodel project to make a profit is my jam, I suggested a scenario that worked for all.
I’ll bite! I want to hear the details of how you got the property for $10? Lafayette has gotten so crazy these past few years, the average days on market has been in the single digits every month and our title company reports it’s the hottest sub market in the whole country right now.
Hi @Steve K.! So, this was not what I would call retail, meaning not on the MLS. You can't get these types of terms in the MLS - at least not in 2022 in Boulder County. It reminded me of when I first started in REI and I was wholesaling. But instead of me farming and marketing, these happened to be repeat clients and friends who reached out to me. I felt like they where leaving money on the table so I threw out a sort of partnership with terms that felt fair to both of us.
I hired a trusted real estate attorney who actually started CAREI. He drew up all the paperwork after I told him the details - Sellers keep paying the mortgage, taxes and utilities. And I would use my own money for the remodel. Plus I would manage the project with complete creative control and decision making latitude (as the trustee). I'd then list in the MLS. We agreed on a cap to protect their equity and give me a return on putting my own money on the line. The QC deed was granted to Property Address Trust that's where the $10 comes in - must have legal consideration. This trust agreement named all 3 of us: husband and wife (50%) and my company (50%) as co-beneficiaries. Running concurrently with the Land Trust was the Co-Beneficiary Agreement that defined the equity split.
Easy Peasy :) I simply showed them a resale study in google sheets and the numbers made it a no brainer. In the end, the sellers walked away with about $80k more than if they listed as-is. Plus they had a tremendous amount of equity as I sold them the house 10 years ago for $290k. I made a return on my investment + a commission. The buyers got a much better, more updated and functional home. Everyone won!
I bought my last HUD home for $10 according to the deed recording.
Very cool concept - and very unique. For most flips I do there isn't enough profit to justify splitting the profits. Usually I'll settle for 15k or 10% of the ARV in my market.
@Jeremy Horton and @Anthony Salazar thanks. I was taught to minimize my risk by putting as little of my own credit and cash into a deal. I'm honestly a bit taken aback that there isn't more info on BP about buying on terms like this. But I'm still getting familiar with the platform. Open to being pointed in the right direction..
I bought several HUD homes in the early 2000s with flipping as my exit strategy. I wonder, if we can't stick to the 70% rule should we be buying? Just sayin'...I saw people lose their shirt in the 2000s because they didn't stick to some sound investment guidelines :)
Wow Sheila, that is really impressive. I don't think in California and that too in Orange County we can ever have that kind of luck...... but never say never right. I would love to learn more about the land trust and how much it costs and everything. Please keep me posted.
Also if you can share how did you find this deal that would be much appreciated. Thank you.
@Deepa Kumar thanks so much! I followed my instincts and the sound principles my mentors taught me. Yes, never say never;) I mean, here in Boulder City - and even the county, many think prices are untouchable at $700+/sq ft for entry level SFHs. But if you know what to look for and listen to what people want and need you can make buying with no money down terms work. I mean, I'm no guru and buying this way is not illegal (as some tend to believe). It does take some education, however.
To address how I found it - they reached out to me. To further explain, as mentioned, I used to target distressed properties and sellers to have them call me. When I became licensed, I had done so many deals in my own portfolio that I got retail clients bc they saw me as an expert. The sellers I partnered with on this deal were repeat clients (I only work on referral and with repeat clients) so they knew I could and would help them. Ultimately, it goes back to one of the first books I read when learning about REI: How to Win Friends and Influence People. It is invaluable!
That's very impressive. I am looking to learn more about this type of buying as every now and then I will see a deal crafted in very creative that it's noticeable as it is unique. My ultimate goal is carry that knowledge over into MFR acquisitions. In other words I am looking forward to a class or what you will put forward. Again congratulations on that deal!
Hi @Joel Case yes! I haven't seen the show but one of my friends made the same comparison for me. Just to re-state it's so not illegal. I mean, would HGTV make a whole show about it? Thanks again :)
Shiela Roberts, I would like to find out how did you manage to get the property for $10 and is it possible in every state or just CO. I would really appreciate some feed back. Thank you