Quick turn Condo - Daytona - Land Trust Saved The Project

[Chad Shultz]

Investment Info:

Condo fix & flip investment.

Purchase price: $80,000
Cash invested: $109,000
Sale price: $160,750

Found a condo that we felt could be a quick, easy turn. This one was set to go to public auction for foreclosure. While bidding on the foreclosure, the auction was stopped and removed from the docket for the day. This was strange, so I looked into it more. I was able to contact the owner directly and meet in person to discuss the situation. I found out the owner stopped the foreclosure by filing a bankruptcy the morning of the auction.

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

This was a simple project with only interiors to worry about, since the condo took care of everything outside. It was a small space overall, compared to many projects we do, so we knew we could get in and out quickly.

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

After speaking with the owner who was in foreclosure and bankruptcy, we arranged a contract. We had the owner put the condo into a land trust, so we could purchase it inside the trust and avoid a public visible exchange. Within a week, we were working. The complete interior renovation took about 5 weeks, minus Thanksgiving and Christmas. We listed the first week of January and got a contract within 30-days. Buyer was cash. There was only one set of closing costs, so we saved there too!

How did you finance this deal?

This was a cash deal and we used our own cash to fund the deal. This allows for more profit, since we were not paying interest.

How did you add value to the deal?

Complete interior renovation, including HVAC.

What was the outcome?

We wound up making about $50k+- profit overall.

Lessons learned? Challenges?

Some condos have "first right of refusal" clauses in their docs. In this case, if we advertised we were purchasing for $80k to the rest of the owners, someone would have purchased it out from under us. In a Land Trust, we were able to do a contract for beneficial interest, thus not making it a public event and we were able to circumvent the "first right" clause. After the reno, when presented with the contract of $160,750, none of the owners exercised the "first right" and we closed on sale.

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

I handle my own real estate as a licensed agent in Florida.