Single-family residence other investment.
Cash invested: $6,000
This property was my late in-laws residence. The property was inhabitable and required over $100,000 in repairs, including foundation and retaining walls work. It was a nightmare. Everything that could have gone wrong, did. I was behind in taxes, had building code violations, squatters selling drugs... you name it. The easiest option would have been to sell but my son and I struggled through it. The hardest part was qualifying for a conventional loan that would allow us to keep the property in the family due to the emotional attachment I felt for it. Fast forward 5 years and the property is worth $600,000, but in Los Angeles even a small house like this is that expensive.
What made you interested in investing in this type of deal?
This was primarily a transaction fueled by principle and emotional attachment. A lot of my in-laws history was attached to this little house in Los Angeles, and I wanted my son to learn that trans-generational wealth is a sound concept anywhere in the world. Because he took heed to my advice, he now has a beautiful asset that cashflows and has added quite a bit of equity, improving his net worth substantially. Now is time to repeat the process.
How did you find this deal and how did you negotiate it?
The property was bequeathed to me by my mother-in-law as her Successor Trustee.
How did you finance this deal?
My son qualified for a conventional loan for purchase and rehab.
How did you add value to the deal?
On top of re-doing everything, we added 1 more bedroom to maximize the use of the small lot. Later we spent money on landscaping the property professionally, which has been one of the best moves.
What was the outcome?
We went from a property where I received a $25,000 cash offer, to a property now worth $600,000.
Lessons learned? Challenges?
Doing the right thing does not make economic sense sometimes. Struggling through the process of rehabbing this property taught me more than just adding to the bottom line. Leaving and preserving the economic family legacy was a priceless lesson.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes! My general contractor was an angel. We were blessed to find someone with his integrity.
Great post. Thanks for sharing and like the format!
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