Its condemned, bad area & with $1800 in code violation fines and back taxes

This house was a rental, the old lady was not in any hurry to sell. She was holding out for 30K, I tried for weeks to convince her the house was only worth 20K on a good day.

During this time My buyer had called and asked if I had anything for him. I told him about this condemned house with a bad foundation, bad roof, rotted front porch and needing a total rehab. But, the lady wants 30K and I dont think anybody will want it.

Well, lo and behold, he looks it over and tells me he will buy it for 35K
The pre lim report showed $1800 in liens. I finally got Martha (the seller) to sign my contract. Before signing she asks, are you going to pay these liens?

I laughed and said, Hell No, those are your fines, not mine. She says well then I will only get 28K and the IRS will get a big chunk. I should of said, Welcome to America.
Instead I said, yea but you will have these fines off your back, they will continue to grow with penalties and interest.

She looks off in the distance and says,I wonder what my deceased husband would do? Her daughter was with us and says, I’m sure Dad would want you to get rid of this problem.
She then asks me, you know what I’m going to do with this money, I said what?
I’m going to rehab my 2 bathrooms. I tell her, alright. That will be nice.

I’m only making 5 Grand, but I only have a few hours of looking over the property, a few phone calls and some negotiations.
And, it was fun.



What surprises me is that your buyer was willing to pay $5k over the old lady’s asking price. As if all the area investors were beating down the door to get the thing. Ha, you just never know what your buyers are looking for until you give them something to nibble at. Great job!

how much of the closing cost will eat in to the 5k profit?

Haha, on my very first deal I wrote into the contract that I would pay half the closing costs. After that I thought, Why did I do that? I will just write in all my contracts that the buyer pays all the closing costs.
And they have and they do. Of course if I only have one buyer and hes sitting on the fence ready to bail, I may pay half.
I’m still surprised that anybody would want this crap house. It’s a real dump. It was rented up until 7 or 8 months ago when the renters daughter let the code inspector in, the violation was because the water heater wasn’t to code.
Walking around the house you can see the 4/4 support posts are rotted, that might be an easy fix though, the wooden front porch is rotting but you can build a new one for $400. Maybe I cant see the value here. I estimate the ARV to be 60K & 10-15K in repairs and will rent for $700 - $800
So, some of the junk houses I’ve been looking at and I thought the sellers wanted to much, I am reevaluating the situation. I’m starting to offer more.
Let’s make some money… rando

Yea Baby, This deal closed, it took exactly 10 days from when I got it on contract and picked up the check and maybe 6 weeks total of negotiating and trying to pin the lady down.
The title company printed a summary of how everything went down. It seems Martha (my seller) had to pay $2,602 in liens to the city and only $150 in taxes owed. She walked away with $27,303.60
The Wholesaler (me) was paid $5,000 assignment fee. The Real Shocker is my buyer/partner the Realtor/broker made $17,000 as an assignment fee.
Holy frikin piles of dung!!! His buyer paid a total of $53,175.93.
I cant understand how this junky little 800 SF house with a bad foundation in a bad part of town can be worth that in its current condition.
I dont know, should I be pissed off that I only got 5K and my partner got 17K or be happy for him and content that I got what I did? It’s interesting that he didn’t try to bid me down and he even volunteered to pay this lady’s liens if she insisted she had to have 30K walking away. And the same with the other deals we have going, it seems he will pay whatever I’m asking.
We have several more deals closing in a few days.
I’m actually happy to have found this guy, however 'm going to be re-evaluating my assignment fees on future deals, maybe kick them up 50%
Let’s make some MONEY… Rando

Maybe the buyer and/or your buyer/partner saw something in the location and land above and beyond the value of the home. If the property is in a transitional neighborhood or if the end buyer owns the property next door, these could be stimulus that would drive up the property value even if the condition of the house does not warrant it.

I believe you may be correct, its a big corner lot, their are multi units on the block, and this lot may be large enuf for a 4 or 6 plex.

There you go. Property values are often in the eye of the developer or investor with vision. Finding transitional properties or buildings that can be converted or land that can be split can be cash cows for the savy investor. Often the owner doesn’t even know what he or she is sitting on and is more than happy to take market value for their home.