Purchase Date: 23 AUG 16
JV Funding Date: N/A
Sale Date: 30 MAY 17
Closing of Books: Still Open
Note Cost: $5,500
Estimated Workout Costs: $3,500
Total Investment: $9,000
Sale Price: $15,000
Check at Closing: $5,042.02
Payments: 5 monthly payments @ $1,000
Actual Workout Costs: $4,235.11
Profit after costs: $306.91
Not our favorite story, but we got out of this one with our shirt still on. We could pick up this note for pretty cheap. $5500. Our realtor told us we could get $25,000 As-Is once we got it. There were back taxes we had to pay. It was vacant and the land contract was not recorded. We just needed to get the deeds recorded and could flip this property. We secured the property and started preservation.
Then the process of getting the collateral started. After a couple of months of waiting, we received some poorly written deeds. We had to ask the seller for new copies because the legal description was incorrect. After the third version, we had our attorney draft the deeds and then sent them to the seller to sign. Finally, we were ready to record. In Cuyahoga county, all parties have to provide their standing with the state they are from. Our LLC was legit, but the seller was not. We asked for them to get legit thinking they were not aware of the problem, but after another month, we were not getting anywhere. Fortunately, in the State of Texas, the Texas Comptroller is current, but the Secretary of State is a year behind. We were able to find a record showing the seller as a legit business in Texas from the Secretary's website. After six months we had the deed recorded.
During this six months though, the copper thieves paid a visit and ripped out some piping. We had paid to have this property winterized, but someone didn't turn off the water. With the ripped out pipes, the basement flooded. That $25,000 value kept falling with every gallon of water in the basement. After about a month of cleanup, we listed this thing for $18,000. After a few weeks, we got an offer of $15,000. $10,000 down and $5,000 spread out over five months. SOLD!!! We were out of this headache and could move on. And while the return isn't anything to brag about, it's still a positive return. It's our lemonade without sugar story.
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