Real Estate Deals – Looking Past the Obvious
I want to give you an example of why you should always look at every property you see as a possible investment deal and never take anything at face value.
While out looking at bank-owned properties one Saturday afternoon, I ran across a particularly ugly house on the MLS or Multiple Listing Service.
From the picture, the house looked like it was about to collapse, so I was not especially interested. However, since it was only a few blocks away, I decided to drive over and take a look. When I arrived at the property, the listing agent’s sign was posted in the front yard, and the photo matched the house.
The listing noted this 1,600 square foot property was a 3 bedroom/2 bath house on 1.6 acres, but by all appearances, it didn’t match the description. The tiny house was in terrible shape, was well past a repairable state, and the lot size was much smaller. I parked my truck any way and got out to walk the property. Looking through the broken windows, I noticed there was only one bedroom and bath, the uneven wooden floors were torn up and didn’t appear stable enough to support any weight, the roof was leaking, and overall the house was in poor condition. Certain that I was at the wrong property, I walked back to the street to confirm the numbers on the mailbox, and sure enough, the address on the mailbox was correct, but the number on the front door didn’t.
Standing at the mailbox, I examined the listing more closely, starting with the most obvious discrepancy, the supposed lot size of 1.6 acres. I took out a pencil and paper and sketched out how the property should be shaped based on the legal description. The legal description stated there was a part of the property that was 462 feet long and 30 feet wide, which sounded like a long driveway! The house I came to see, however, didn’t have a driveway.
Noticing a gate on the other side of a small ditch to the left of the house, I walked over, leaned around the corner and sure enough, discovered a long overgrown concrete driveway leading to a large house on the back side of a field.
I knew I was on to something, so I opened the gate, went back to get my truck, and drove down the driveway. Posted on the front window was a notice from the bank that owned the property.I walked the property – all 1.6 acres – and I knew this was definitely the right house.
I was very excited, but since this was an online bank auction, all I could do was wait patiently and stay quiet about it until auction day.
Luckily, on auction day, I was up against only one other bidder. After a short time of bidding back and forth, he no longer exceeded my bid, and I purchased the property for $59,800, about what the land value would be for an empty parcel.
After rehab, the property sold for $193,000. With a net profit of $48,384.39. Not a bad payday for keeping my eyes open and paying attention!! You can do this, too.
Had I walked away and discounted this property based on the property listing/description and first appearances alone, I would not have found this remarkable opportunity.The lesson here is to not discount a property based on first appearances alone.
Pay attention, ask questions, walk the property, ask more questions, investigate, and determine if there is an opportunity for you to make money.
Disclaimer: I am not an attorney or CPA. The content herein is merely opinion, and should in no way be considered legal or financial advice. Please seek professional legal and financial advice for your specific situation.