Julian Montoya Rehab Deal

 

Julian Montoya Rehab Deal

JM11 Investments LLC in Arden, NC

This has been my team’s most difficult deal so far but also the greatest product produced. 11 months passed, 1 joint venture fell through, and 3 closings occurred, close to 20 contractors fired, great new crews found/hired. This deal was passed to me through a pocket listing by a Beverly-Hanks agent. The agent was a close friend to the seller\'s family. He wanted to help the seller sell her house but the seller did not want to list it as they desperately needed the money. Commissions would take a big chunk out of her net income. When I went to the house, I noticed in the tremble in the seller\'s voice that this house meant the world to her. Her grandfather had built this house a long time ago. I noticed as I walked through the house that it was more profitable to tear it down/build it back up than to rehab it. However, I noticed that the seller and agent were very keen on maintaining the guts of the property to preserve her grandfather’s legacy. They did not want to tear it down. I ran the numbers to not tear it down and it was very tight. At this point, this was not a deal worth pursuing. They were trying to sell this property at $105,000 but there was no way to meet any kind of return buying it at that price. After a couple of counteroffers, the seller accepted an offer of $70,000 because I was the only offer that was not going to tear down the house. At first, I started with a partner and a couple of months later I had to buy him out of the deal at about $83,000. This included the original purchase price of $70,000 plus some rehab costs he incurred up to that point. Our team realized at that point that we were going to be really tight because this partner was going to put all the money into the rehab as he learned the process from us. My contractors were loyal enough to figure out a payment schedule so that we could at least break even but finish the property ourselves. The challenge at this point was that once you own the property it is a lot tougher to get rehab funding. I finally acquired funding from a hard money lender for $130,000 and closed again. So 1 closing with the partner, 1 closing to buy him out of the deal, and 1 closing for the rehab funds. The deal started on February 5th, 2018. To buy partner out and find funding, this took about 5 months in total while we lightly rehabbed the property. On August 15th, 2018 I got the property under contract by clients. The property was not finished. I gave them a budget to finish the house to their specifications. On March 15th, 2019 this house closed at $285,000. This was a huge win because the products and before/after pictures are incredible. Although financially it was not the most profitable deal, the house initially came with 2 acres. To gain money back, I subdivided it so I can build another property on the other acre and recoup all my losses for my company and the contractors that stuck through with me. The difference is that a lot of knowledge acquired and the crews on the team now are top notch. Purchase Price: $70,000 Rehab: $160,000 Closed @: $285,000

Rehab Details

Property City: Mills River
Property State: NC
Purchase Price: $70,000
Repair Costs $140,000
Sale Price: $285,000

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Case Study

How did the FortuneBuilders team and resources help you to accomplish this deal?

An important piece of education is if you buy the property at the right price, you cover yourself in many aspects. If I had bought it close to the $105,000 the seller initially started with, my team would be very negative after a long and expensive rehab.




Before & After Photos