Investment Info:

Single-family residence buy & hold investment in Garner.

Purchase price: $160,000
Cash invested: $160,000

SFH that was a court ordered sale. Couple split up. Wife stayed and trashed the house. Needs deep cleaning, debris removal from yard, kitchen remodel, and assorted other work. ARV will be 230,000.

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

This house was 5 minutes from our home and across the street from the just completed elementary school remodel. I’m a nice small neighborhood on a quiet street with good access and egress.

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

My realtor contacted me with it. It was listed on MLS for WELL below market. Everyone in Wake County viewer this house since it was priced so low but most were turned off by the work required.

How did you finance this deal?

All cash from investment funds.

How did you add value to the deal?

Other than some electrical work it will need we will self perform all needed work with our internal crew.

What was the outcome?

House was just closed. We are waiting to start work in a couple of weeks. This will be a several month restoration.

Lessons learned? Challenges?

We expected to be upset on our bid which would be 5% higher than our 160k bid. We still made money if we upset the upset so we were comfortable with our numbers. When we didn’t get upset, we got nervous that we’d missed something. In talking to other bidders after, they couldn’t make their numbers work.

However we are buying and holding so our numbers were based on rental rates, not flips. Others were not looking at a simple add to add a 5th bedroom. That is about 400 per month more rent.

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

Jane Ball of Be Home Realty. She started and finished the deal, and provided all the numbers. My research after the fact showed he to be spot on.

@Dan Moore How was the sale process? Did you find the sale through Wake County's online public listing? I have not yet visited the Wake County Courthouse and am curious about how easy/challenging it may be. 

It looks like you may be able to BRRRR to a no-money in situation, right? Good luck with the upcoming work and congratulations on the purchase!

@Will Kaufmann , this was actually listed on the MLS. A local attorney handled the sale through a bid process, but not like through the Secretary if State. This was highest and best straight to the attorney on the first round, with the normal SoS 10 day upset bid process on the back end.

The court house is an educational trip that is worth doing for that reason. I know people are picking up units there and in the upset process after, but I haven’t witnessed any real deals. My experience is it is 10-1 newbies vs people that have any experience. We may return to the courthouse in the future, but if so we will just use the SoS upset bid rather than the initial bid at the courthouse door. Better use of our time. 

We won't try to do a full cash out BRRR as it doesn't meet our goals. I like to be 50% LTV but with a 15 year note instead of 30. Same cash flow but half the time period for debt. I'm not 28 trying to replace my W2. I don't want to be 70 still trying to get houses paid off.