Had an auction scheduled in the South Shore town with a fire damaged property on the lakefront. House was in terrible condition with substantial damage and rot in the sills. This is one where you don’t even consider the renovation or repair of the structure. How did we value it? It’s has lake frontage and we looked at it as a buildable lot less demolition and disposal costs. Came up with a threshold number and with other bidders won the bid at $66,000.00. So, think about it. We purchased a buildable lot with lake frontage for $66,000.00. Met with the local building inspector and got approvals to build a raised Cape. Had an existing septic system and well in good condition. Remember to research these items as we referenced earlier. Went to a local portfolio lender and got an acquisition/construction loan of 80% LTV of future value. Remember about LTV? This is where you have to become your own GC (general contractor) and set up your takedown schedule (budget). Remember, the material costs and sub-contracting costs are wholesale priced (the same as a retail builder). Control your costs. After excavation, pouring a new foundation and framing with the sub-contractors, we roughed plumbed and rough wired the home with our other subcontractors.
The plumbing contractor approached me and expressed interest in the house for himself and his wife. They wanted a price as is right now. One thing about this business is there is no need to be greedy. Think about your goals. Our philosophy is to buy under and sell under to still make a great return and expedite the process. We came to terms and made $70,000.00 after costs. They got the property for $50,000.00 less than market value when finished. Everyone’s happy. Don’t try to “Blue Sky” deals with greed. It can cost you.