Although I have many others to tell about, I’d like to tell you about my favorite success story. I found a property that had a county code enforcement lien on it, which was for initiating demolition proceedings. The lien was for a little over $1,000. I sent a letter to the owner only because I couldn’t find her phone number. She called me, and we met at the property.
When I saw the property, I tried to be positive and hopeful, but at the same time I fought that undeniable notion in my head that, yeah, this place ought to be torn down.
I mean it was really bad. If it was concrete block, it would have been different, but this place was stick framed on blocks with a crawl space. I’ve been in plenty of homes in really bad shape, but I have to admit, I was hesitant, (or scared) to say the least, to even go in the place.
The house was completely abandoned, all the windows were busted out, and their were huge “natural skylights” in the roof, which led to the extensive water damage inside. This wasn’t in the nicest neighborhood, and I knew there was drug activity going on at the place.
A rule of thumb is that if the rehab costs exceeds 50% of the after repaired value, then it’s most likely a tear down. This house would have taken around $50K or $60K to rehab, but was only worth around $85K tops.
The worst part was that the woman still had an $18K mortgage on the property. I told her to deed me the house, and I would do my best to get it taken care of.
I immediately called the code enforcement office (just in time–they had already put it out to bid for demolition), and had them stop the demolition proceedings. If the county demolished the house, there would have been another $6K to $9K lien placed on the property.
I got all the necessary paperwork notarized and faxed in to the lender. Luckily, the lender was a small local lender, and I didn’t have to go through all the formalities of the short sale.
I didn’t think I’d have a problem with the short sale and code enforcement office, but the hard part would be finding a buyer for this place. As it turned out, not the case at all.
While doing some comps, I noticed a local civic association had bought a few houses in the area, so I looked them up. They knew the area very well and were working with community to clean it up.
I told them that I was an investor, and that I was trying to help this seller. I told them I probably was going to make very little if anything at all on this deal, and I needed their help.
They were very familiar with this place and were ecstatic to get it. They were well aware of its shape, and they confirmed that it was a hive of drug activity.
They wanted to get the place for only $5K. They said if they couldn’t rebuild on the lot, they would tear it down anyway and put up a fence. So, now I knew what I had to get it for.
I (on behalf of my buyer, which was a trust in which I am the sole beneficiary) offered the lender $1,500 for satisfaction of the mortgage, and two days later they accepted.
It was the fastest short sale I’d ever done. At first the civic association agreed to pay all the closing costs and the lien, but when they saw that I was making some money, they started to turn on me.
Hey, I didn’t know I was going to make any money. I hadn’t anticipated the lender accepting that little. But what are you going to do? I ended up conceding, of course, just to make it go through. I paid half the $1,000 lien and the unpaid prorated taxes for the year.
I ended up making a little over $2,800 for just under three weeks’ work. Not my biggest deal, but like I said, it was my favorite because it initially looked like a deal that I should have run from. Honestly, I was reluctant to even get involved, but I knew that if I didn’t help her, no one else was going to.
The seller didn’t get any money from the deal, but was completely free of this problem forever. She called me a Godsend and thanked me several times. I didn’t do this deal for the money, but rather because it was the right thing to do.
Deals like this really help to bring into focus what we as investors really do, which is not have people help us get paid, but get paid to help people, right?