Updated 6 days ago on . Most recent reply
September Auction Purchase
Investment Info:
Single-family residence wholesale investment.
Purchase price: $52,500
Cash invested: $52,500
Bought an apartment in a nice building. The units in this building when they hit the market, they sell in less than 7 days. Good school district, parking, nice area. Bought it at auction for 52,500. Estimated as-is value: 90,0000
What made you interested in investing in this type of deal?
I am buying this asset about 40% off its market value.
How did you find this deal and how did you negotiate it?
I found this house at auction. I went head to head with another bidder for about a dozen bids and I finally won at 52,500. My ceiling was 60k. This is worth 90k as-is and if the cosmetics are not that dated then doing 15k in sprucing up can make it worth 130k.
How did you finance this deal?
Auctions are cash environments. 10% due in 24 hours, the 90% due in 7 days. If your money is late in anyway you lose the property.
How did you add value to the deal?
The value is the deal. I bargain hunt. With my money and clients money. i discovered that how you enter a deal means everything.
What was the outcome?
There's two possible exits:
1) Sell as-is for 90k
2) if a 15k rehab gets me a 130k sale price then I may go for it. The units in this building move in days. It's just one of those buildings.
Lessons learned? Challenges?
The challenge was building out the network with the right people, that's what sets up the opportunity. Now that the network is set-up it just means showing up the first monday of every month. Sometimes it is my money, sometimes client money as I have a consulting biz, and then sometimes I take on debt to buy. The spreads are big enough to beat a very short term loan.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes, I have an expert in the market I work with closely. he does drive buys, meets laborers, he analyzes, he sells, he wholesales, he invests and he knows the market street by street. Finding him was the hard part and we been through about 25+RE deals now together and most of them wound up being headaches but we started the auction venture in March and we bought 3 so far and projected return on capital is 70%ish thus far.