This house is going to cough up $26,000 in rents over the next 18 months.
Meanwhile, we found this house after two hours of driving our farm area and taking down addresses of vacant and abandoned property.
I researched this property and found out the owner lived close by. The property is in default, but not scheduled for a trustee sale.
It's been vacant since last Fall.
Now all this information helped me know how to pitch the seller. The fact that the seller wasn't even trying to rent out the house tells me this seller was tired of dealing with it and out of options.
Well this house is a great candidate for a loan mod and/or a short sale. The property is in terrible shape outside, and needs a cosmetic overhaul inside. Flooring, paint, some hardware replacement, and built-in appliance installation(s). Then there's landscaping overhaul (cleanup, trimming and watering). Total estimate $3,500 (less if we don't replace the flooring).
Market rents are $1.00 per square foot or $1,460 a month with 1,460 square feet of rent-able space, not including the garage.
While we rent the house out, we'll work with the owner to modify the loan, or short it. The 2nd will get about $3,000, and the first will be reduced by $30,000 for a total encumbrance of $90,000. Plenty of room for profit with a sale of $158,000 to a credit challenged buyer.
Meanwhile, our rent of $1,460 over 18 months will net us about $26,000. We'll pass on the cost of back taxes to the end user, if our short sale/loan mod is successful, and include it in the sale price. Meanwhile, we've got insurance costs of about $700, and we're paying the buyer a few hundred for granting us title (held unrecorded in escrow, which is our personal safe deposit box), until we can successfully negotiate either the loan mod or short sale.
All this to say, Sub2 profits come after taking action, not sitting around wishing things were easier!
Normally, I would tell you about just the pretty houses we buy, but this proves that money can be made out of something ugly, too!
If you would like to know how we structure deals just like this one, click the link below.
"How To Make $26,000 in 2 Hours...!"