Other fix & flip investment.
Purchase price: $1
Cash invested: $3,000
Sale price: $100,000
With the help of an attorney, we helped a seller with the deed-in-lieu of foreclosure on their house at 4794 Spring Drive. The septic system was on 4802 Spring Drive. The seller said he would deed us the lot at 4802 Spring Drive as our compensation. We had a buyer pay us $40,000 toward the $100,000 purchase of the lot, but he defaulted. We found a buyer willing to pay $63,000 for the lot once we got the bank that owned 4794 Spring Drive to sell the house. So, we made $100,000.
How did you find this deal and how did you negotiate it?
We sent direct mail to people facing foreclosure. The seller's house at 4794 Spring Drive was being foreclosed. The septic system was on the adjacent lot at 4802 Spring Drive. The seller said he would deed us the lot if we negotiated a deed-in-lieu of foreclosure. Once the bank took ownership of the house, the only party they could sell to was us. We had a buyer default and forfeit his $40,000 deposit. Then another buyer paid $63,000 to buy the lot. We netted $100,000 after expenses.
How did you finance this deal?
The deal only involved putting up money to pay the attorney and the transfer tax on the lot. That was it.
How did you add value to the deal?
We helped the seller achieve his outcome. The flipper fixed up a house and lot and sold it for $200,000.
Lessons learned? Challenges?
The keys to this transaction were patience and bringing in an attorney.
What a deal! How many direct mail deals have you done before this?
I had a similar situation I bought a foreclosure for 150k cash.. go to the front door.. lady and about 5 disabled kids.. most folks would just have evicted her.. I am like dude I cant do that to these people. So she goes on to tell me the septic is on her uncles property next door.. I am like OH sheet . So then I say well who owns the property behind ( me thinking I can get an easement for a new septic.. she says she does.. I say do you owe anything on that.. she says NO I own it free and clear so here she is just lost her home to me on the court house but has this 4 acre free and clear.. So I know that development is coming this way.. I don't want to boot her and the kids.. and I think what the heck I will land bank the 4 acres.. so I told her go to your attorney and come up with a price you will sell me the 4 acres for and I will give you a credit for what I paid for the house.. I take the 4 acres U get house free and clear.. long story short they come up with 250k for the 4 acres I deed them the house and give them another 100k cash so now I am in it 250k large with a bare lot.. that I am figuring to hold for a number of years.. well sometime you do the right thing and provenance smiles on you.. 4 months later a big developer is doing a land assemble and needs my 4 acres I sold it to him for 950k cash .. and made 700k on that deal in less than 1 year.. and the lady who would have been homeless now owns her home free and clear and she could also sell to the developer for a big chunk if she so desired.. me I just took my check and put it in the bank. that was my best OOPS bought a foreclosure that has no septic LOL …
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