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Property #5

March 19, 2011

This home was purchased from the same bank as Property #3.  After seeing how quick the bank accepted my girlf friend’s offer, she recommended I bid on another property that we saw on their website.  The house was in decent shape, but I was not crazy about the neighborhood.

This bank never lists their properties on the MLS, just their website. They had it on their site at $99k, but I don’t think they put much thought into that number.  I pulled the comps and did some thorough research as this was not in one of my farm areas.  I found the price to be  high, but the condition of the home was not bad.  Investor comps were coming in around $65-$70k for one in really poor condition or around $80k-$85k for one in similar condition.  ARV’s were all in the upper 90’s up to $120k.  I put a bid in at $52k “All Cash” on their $99k list.  I was half expecting the usual bank counter at $97k, but pleasantly surprised at their counter of — $55k.  I took one more look at it, questioned my judgement for a day, and then accepted.

This property is a 4 bedroom, 2 bath with a 2 car garage in the rear.  The home is almost 1,700 square feet and has a great floor plan.  It has nice open living rooms and a large fenced yard.  The real bonus was the bank put new carpet in the entire house.  The roof was only a couple of years old, the fence was a year old, and it has a nice carport in the back.

The bank put new carpet in the home, but unfortunately it needed a complete paint job on the interior.  I also replaced the flooring in the kitchen, both bathrooms and the entry way.  This was essentially all I did to the house and it really made a difference.  I always find it amazing what new flooring and paint can do to a place.

I purchased this one smarter and used minimal liquid cash and mostly my HELOC and unsecured lines of credit.  There are a few more rentals in this neighborhood than in my primary farm areas, but given the price at which I bought this property it allows me to charge less rent than my competition.

I almost wholesaled this house right after purchasing it.  Then after I got it cleaned up I was considering retailing it. But the rental return is great and I did not really need the cash, so my plan is to keep it. I am still not sure what was going on at this bank, but they cleared out a lot of their inventory that summer and fall.

Here are some stats:

Tax value:  $114k  (will challenge in July)

List price:  $99K

Purchase price: $55k

How I bought it: Lines of credit (42k) / liquid cash (13k)

Rehab:  $4k

Rent:  $995

Rent ratio:  1.68%

Here are some pics:

These are before pics of the baths as I changed the flooring and painted both baths white.

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