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Property #3

March 5, 2011

My girlfriend was getting the itch to pick up another property after she had so much luck converting her childhood home to a rental.  We had been watching one just around the corner from her primary for over a year. I sent a couple of letters to the owner of record on the tax rolls. I even tried to call them with no luck.  Finally, she noticed a sign in the front yard. It was not a realtor sign, but it was a bank sign that we both recognized.  We went to their web page and there it was.

We called the bank and found they were not listing the home with a realtor.  We put an offer in and the VP of the bank accepted.  We might have bid slightly high, but at our price it still cash flows well. The home was in fairly good shape, but did need some cosmetic work.   We ended up putting almost $5k into it.  We still have the same tenant in there and looks like they will be there a while.

This house is a few hundred feet from our primary so we drive by it everyday.  The tenant drops the rent off at our front door every month.  I was somewhat apprehensive about having a rental so close to our primary and allowing the tenant to know where we lived, but I don’t forsee any problems with this tenant.

This is a 3 bedroom, 2 bath house about 1,500 square feet.  Two car garage with rear alley access.  The home backs to a small creek across the alley.  It’s in a great location with easy access to several of the major highways in Dallas and is in a sought after school district.  There is no carpet in the home – all tile and laminate wood flooring.  The paint on the inside only needed some minor touchups, but the outside needed a complete paint job.

Here are the numbers on this one:

List price: $89,000

Tax value: $97,500

Purchase price: $68,000

How we bought it: 401k loan and liquid cash

Rehab: $5,000

Rent:  $995

Rent ratio:  1.36%

We need to find the rest of our pics, but here are a couple of them.  These are all before pics and there are no external shots of the front of the house. The bathroom in the bottom picture was tiled, wall paper removed, and the walls and cabinet was painted.

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4 Comments
  1. Cesar permalink

    Good stuff. Do you put any contingencies in your offers to the bank for inspections or anything else. It sounds like you don’t need financing as you pay with cash and/or savings.

  2. Cesar,

    When we offer on bank properties we offer all cash, no inspection, and no termination option. So naturally, we look at every house we bid on and look it over thoroughly.

    We made the mistake very early on of trying to finance an investment purchase. It’s just not worth it, the closing costs are usually less than $500 with a cash purchase. We now use lines of credit drawn off of our other properties that we own outright. Very cheap interest and we only pay it when we draw it down.

    Thanks for the comment..good luck to you,
    Chuck

  3. Thanks for sharing the stats and pics. I was curious how one could take a thorough look before purchase (assuming then one can get the key)?

  4. We just called the bank and got the lock box code. My father is a broker as well, so we can access to properties on the MLS.

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