Purchase Date: 21 OCT 16
JV Funding Date: 18 NOV 16
Sale Date: 29 JUN 17
Closing of Books: 27 JUL 17
Note Cost: $9,500
Estimated Workout Costs: $4,866
Total Investment: $14,366
Check from Insurance: $20,000
Check at Closing: $1,835.23
Actual Workout Costs: $6,947.95 (extra workout costs covered by AJA Investments)
Profit after costs: $2693.64 each
Return for JV: 18.7%
Annualized Return for JV: 28%
Initially, we thought this borrower would start paying again. However, after he harassed almost every vendor we used in this deal, we pursued our legal options. We posted a notice on the door, as is what you do in Ohio, and we learned that the person that occupied the home was a tenant. This borrower was renting out the house, but not paying on the note. And our realtor who did the posting, and who knew our model of renting out the homes and then selling them as turnkey investments, offered to purchase this property for $40,000 once the legal was settled. Score!!!
Then a couple of weeks later, we start getting calls from a boarding company. They wanted our insurance so that they can get paid for work done on the fire. What? Fire? Our property that we were about to get in a few weeks had caught on fire. Initially we thought it was the borrower, but it turned out to be the nephew of the renter playing with matches in the bedroom. Our dreams of a home run deals were smashed, but within a month we received a check from the insurance company for $20,000. At least we are making a profit. We still had to clear the title though.
Our costs ran over by a couple thousand dollars because the borrower decided to sue us. We settled for $2,000 and got him to sign a release.
Now that we had a clear title, we looked at rehab. The estimated repairs were pretty high, so we decided to sell the shell of a property and get another thousand or two out of it. We listed the property at $6,000 and it closed within the month.
While we did not make that home run that we were anticipating, we still profited because we cover our assets with insurance and by most standards, we made a great profit at 18% ROI within less than a year.