Insane 20 room motel deal

[Jason Chen]

I have an interesting success story to share.

A number of years ago, I posted about a 20 room motel in Central Florida that was a bank foreclosure listed for sale for $160,000. I ended up winning the property for $180,000, and there were three other bidders as well.

It was an excellent buy because the location was absolutely prime, and the condition of the property was more than fair (after repairs would've been done). The roof was ok, and most of the rooms still had good beds and appliances.

After a total of about $70,000 worth of remodeling, the motel was fully operational after 6 months of hard work. It only took 3 months before it was partially operational. The property required some plumbing work and drywall fixing for some of the rooms. Fast forward 4.5 years later, and the motel generates $165,000-170,000 on average per year before any expenses, and about $110,000 after expenses. The total cost of everything was $250,000, and I could easily sell it for $400,000 today.

In case anyone was wondering why the motel was listed for such an unusually low price, it was because the bank that listed it for sale actually thought that the property had to be demolished because the entire plumbing system supposedly needed to be replaced. This was actually not true, as it was only a few of the pipes in the bathroom that needed to be replaced for about $1,000 worth of supplies and labor.

THE BANK LITERALLY THREW $175,000 DOWN THE DRAIN BECAUSE OF A SIMPLE INSPECTION MISTAKE ON THEIR PART

[Jason Chen]

Originally posted by @David Hungerford:

Did you buy it also thinking the plumbing would need to be replaced? Or did you already figure out it was going to be a minor repair. 

Either way, it turned out to be a great buy! 

 No, the thing is that the issue with the plumbing was that a few pipes were just clogged up with gunk, which is common in Taiwan. Florida is hot and humid, and it can happen to smaller diameter pipes sometimes over decades. 

Some things to note was the fact that I was the 4th person to offer. The other three people were a little too ridiculous stingy. Im surprised not one just decided to offer an overkill bid of $225,000 just to steal the property right off the bat. This property is just one of those rare deals where the bank made a huge folly, and it probably took them a long time to realize what went wrong, especially when they could've seen that the property was suspiciously still standing two years later (the bank was very local). If the plumbing really was needing total replacement, it still would've been way undervalued.

I feel like the incompetence of bank employees might actually be a good thing, and we should all wish for them to make more mistakes in foreclosures in the future