Jeff Anderson Rehab Deal

Rehab Details

Property City: Richmond
Purchase Price: $80,000
Repair Costs $61,000
Holding Costs: $15,000
Sale Price: $215,000

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Case Study

How did you find and structure the financing of this deal?

We found the deal from a lead on Zbuyer that was listed as an inheritance. One of the strategies that I used was looking at the leads from the site that had comments. After finding the lead, I sent the seller a yellow letter. The seller was divorced and had really let the place go. The property was vacant, free & clear, and needed a lot of work. The Seller agreed to sell for $80,000, but went under contract for $67,000 and held a $13,000 note until we completed the rehab. rnrnThe key to negotiating this deal was due to developing rapport with the seller and being a listening ear in a time of need. His father was also dealing with sickness, so he did not want to drag the process along any longer. We funded the deal using a hard money lender that we met at the local REIA meeting. The lender has been active in the area with many projects, and was able to offer guidance and was impressed with how we handled this project for our first one. The terms were based on 14% and 3 points for the purchase plus rehab. We ended up coming to closing with a little over $10,000 down.

Provide a summary of the repairs and improvements you made to the property.

The house is a 3 bed 2 bath 1720 sq. ft ranch and was in really bad shape. The kitchen was outdated, there was wood paneling, and the bathrooms were filled with mold. The layout needed to be altered to make the former â??man caveâ? in to a master suite with a bathroom. This was a major upgrade because it became the main selling feature of the home with an included fireplace. One of the bathrooms was replaced with a laundry room and a patio was added in the back. rnrnThe front yard was landscaped and reseeded to remove what was a mess of weeds and vines. The curb appeal was outstanding with the landscaping and after resealing the driveway. The huge two car garage was painted on the inside and the floors to give it an extra clean look. rnrnWe ended up staging the property as well which was recommended by one of the coaches and this helped move the property in one day. I had one of my friends take professional pictures that came out excellent for next to nothing in cost.

How did you find a buyer for the property if you sold it?

We listed the property on the MLS at $205,000 and promoted our open house a week before we allowed anyone access. Joanna is a Realtor so we listed it with her and also marketed on Facebook, FBFlow, and used signs. The buyer came to the open house and was prepared to make an offer that evening. After knowing that there were multiple offers, they offered their highest and best of $10,000 over the asking price. After having to deal with the 90 day seasoning, we were able to close in a decent amount of time to preserve a great profit.

What are some of the major lessons learned that you would like to share with other students that they can learn from?

Having a detailed scope of work was key. We were able to reference back to it during any discrepancies. We also learned to go with your gut if you feel something is not to your liking after the final walk through. No matter how the contractor tries to sell you on how something is not a big deal, ensure that it is to your liking. If you notice, the buyer will notice. We had to go back and fix the hardwood floors after our walkthrough and luckily there was a suggestion made from the buyers realtor that solved the issue, and the contractor got right in to fix it. rnrnThe second lesson we learned is that staging and professional photos was also a major difference maker. We rented the furniture from Rent-A-Center and Joanna did the staging herself, and I got a friend who is a freelance photographer that just wanted to take the pictures for next to nothing. We also learned to put it out on MLS before you allow anyone to walk through to spark more anticipation for an open house. rnAnother lesson learned was to get to know the neighbors. They were helpful with keeping us up to date with anything they may have seen that could have been odd on the construction site, and also very thankful for the improvement that we did to their neighborhood.

Shout Outs & Testimonials

Some key things that helped us with this deal was all of the training and coaching on marketing techniques. Key information about building rapport and negotiating with sellers were also key. On our coaching call with Coach Marcus T, he gave us a great strategy that we would have never used to have the seller hold a note of $13,000. This helped get the initial LTV down for the hard money lender and caused the amount we had to come to the table to be much lower. I also received great coaching from Amy R., who pointed out some key tools in the documents that we used to secure the seller held note. rnrnIf it wasn’t for us attending the rehab boot camp in Dallas months earlier, we probably would have ran in to issues and early challenges due to some contractor snags. Everything that was learned from the detailed scope of work, to the contracts and documentation, put us on a high level that impressed our lender to do another deal with us that we are currently working on. What was also really cool, was having another one of our FortuneBuilder family members here locally that we were able to call on for support and advice.Thank you FortuneBuilders!

Before & After Photos