Hidden in Plain Sight

1 Reply

Investment Info:

Single-family residence fix & flip investment in Knoxville.

Purchase price: $40,000
Cash invested: $12,000

A single family home had significant fire damage from 2017. We bought the home in 2021 with the intention to clear the lot so my grandparents could build an ADA accessible home.

What made you interested in investing in this type of deal?

The primary objective was a demolition of the home- which was super fun and pretty easy. Knowing that prices were high and we were in no rush, we bought the property not knowing exactly what we would do with it. To me, this was a low-stress deal.

How did you find this deal and how did you negotiate it?

This deal was around the corner in our neighborhood. The home across the street had their door open while working on some projects to get it ready for listing. The homeowners across the street knew the owners of the burned house wanted to sell- and they had the contact info they gave to us. We called (2020) but the asking price was too high. A year later, the burned property was still the same. We called back and the owners wanted to sell for 20k less. We made a cash offer.

How did you finance this deal?

Cash offer

How did you add value to the deal?

We demoed the house, spread grass seed and straw!

What was the outcome?

Flat lot was ready for building a new home. We sold the property to my grandparents who are in the process of building.

Lessons learned? Challenges?

The fire damage was all in the back of the property- driving by from the street (and this house was close to the street!) it was not obvious that the home was distressed. This home sat for a couple years un-touched. The owners kept the yard mowed so it was not an obviously distressed property. We drove by it daily for years before approaching the owners with an offer.

The cheapest demo company was not very responsive. Every time estimate was off. In the end, they did not spread seed and straw, which we did ourselves. The medium-priced demo company would have ended up being the cheapest in the end.

We learned that demolitions need demo permits and inspections! But overall this was an easy entry into the real estate space.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

So you paid $40K, and then paid demo costs?  Did you have to secure a demo permit?

That's great your grandparents wanted to buy the lot.  I hope you checked their credit!  LOL    

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