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Detroit Rock City

Ready to rock your IRA? Today our offer on this Detroit asset was accepted and we'll be funding the deal soon. It is a single family (SF) Contract for Deed (CFD) in Southgate, in the Southwest area of Detroit. Our Broker Price Opinion (BPO) came back at a Fair Market Value (FMV) of $55,000 and an After Repair Value (ARV) of $75,000-$80,000. The borrower is behind by 6 months and has an Unpaid Balance (UPB) of $45,338 and unpaid taxes of $2,094. The cost of this purchase is $20,594, which includes the price of the note and the back taxes. There will also be a workout cost ranging from $2,500 to $6,000. We have several workout strategies in place and the returns range from 31% to 83%.

Type: Nonperforming Contract for Deed
Property: Occupied – SF Home in Southgate, MI
Fair Market Value: $55,000
After Repair Value: $80,000
Unpaid Balance: $45,338 + arrearages
Monthly P&I payment: $401
Investment: $26,600
Monthly Rent: $900

Summary of investment opportunity:

We are buying this asset from a hedge fund. This CFD is a SF home in Southgate, MI, part of the Detroit metro area. The property is a 4 Bedroom, 1 Bath, 1045 sq. ft. house built in 1953. It is located in a moderate rental and a stable resale area. This is a good opportunity for a JV Partner to earn between 12%-40% ROI.

The exit strategy on this note is to contact the borrower and try to reinstate the loan. If we are successful this will dramatically reduce our legal costs and we expect a 40% ROI. Plus they get to keep their home. However, if this fails then we would offer some assistance to move, Cash for Keys or other incentives, and then try to sell the property to another investor for rehabbing. If the property is acquired, we will list it at 90% of FMV or as a new CFD at 100-110% of FMV depending upon the internal condition of the house. If the property does not sell within 60 days, we will rent it at $900 to generate cash flow for 6 months and then sell it as a turnkey investment property at 100% FMV. The timeline for this investment is expected to be 6-9 months if we sell it, or up to 12 to 18 months if we rent it and sell it as a turnkey investment property. 

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