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Thank you, CRE Online, for providing such a valuable resource. This site is a blessing for those of us who want to learn from others who are so willing to share their insights.
Here is how it happened: My stepmom told me about a woman she knew who wanted to sell a three-bedroom, two-bath home. She knew I was actively looking to buy distressed properties. (Tell everyone you know and meet--you buy real estate.)
The property is in a rural, residential area and the seller wanted $125K because the property needed work. I ran comps that evening and found the property was worth at least $180K. I ran my numbers and met her a couple days later at the property. Once there, I discovered that the property was on over an acre of land and only needed about $15K worth of work.
I offered her $90K net cash on the spot. Her daughter called me two hours later to tell me her mom accepted my offer. I called my cousin who has a line of credit through a hard money lender to buy real estate and offered her 50% of the deal. Here are the numbers from purchase to selling:
Purchase Price: $90,000
Hard Money Loan: $109,800
Lenders Fees: 8,528
Title & Escrow: $2,910
Disbursement: $776
Rehab Account: $15,000
Closing Costs: $7,411 ($7,000 borrowed from girlfriend)
Selling Price: $160,000
Payoff 1st: $112,845
Title Charges: $1,101
Escrow Fees: $985
Final Audit Funds Held: $350
Net Check: $44,719
Rehab Refund: $15,000
Seller Paid: $3,000 (in extension fees for two delays in closing.)
Total Profit: $62,719
Stepmom Receives: $1,000 finders fee (Doesn't know it, yet.)
Girlfriend Receives: $9,000 back for short-term $7,000 loan
Cousin and I Split the Rest: 50/50
Now it's on to deal number two; wish me luck!
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