3 Elm st

Burnout- made $4500 in an afternoon

I was searching for property. I discovered a tax delinquent property that was available and I optioned it over the telephone using Coach Mitch’s famous $1 Option. The purchase price was $500.

In case anyone is wondering, a signature on a contract that is sent over a fax machine is legally valid.

This property was about a 1700 sf single family home with a nice yard, on a good street, in a good town. Everything about the area was very good, the shopping, the schools, transportation, etc.  The only problem was that a fire had destroyed the house. This house needed to be torn down.There was no saving it. The occupants had left and the property was abandoned.

The fire had been about 3 ½ years prior and was about to be auctioned at a tax deed sale. For that entire 3 1/2 year period, the neighborhood had endured this burned out house on its block. The neighbors were angry about the blight. They wanted something done, but nothing could be done.

How do I know this? I represented myself as the new owner and asked a lot of questions of the neighbors.

I went up and down the street and spoke to every occupant that I could and asked if they knew anything about the house, the previous owners, the situation, etc. Everyone was happy and willing to talk. They all wanted to know what I was going to do with the property.

I met a man walking up the street. He said, “So you’re the new owner. I heard that you were around and I was looking for you. I live right next door to that burned out house.” “ Great!” I said. He asked, “How did you find the bank that owned this house? I’ve been looking for two years and I couldn’t find anything.” I said, “Well, this is my business.”

He continued, “My mortgage bank just lowered my appraised amount and told me that if my house value goes down any further, that they may have to call my loan.” “That’s terrible.” I said.

“What are you going to do with that property?” he wanted to know. “I’m not really sure.” I said. “I might tear it down and put up another house or I might sell it ‘as is’.” “That is a really nice lot.” he says. “I often thought that I would like to add that lot to my property.” “That would be nice.” I said. He asked, “How much would you want for the property?”

Now that is the good question!

“I’m not really sure.” I said. “That would depend on what I want to do. If I build, I have to see how amenable the building department is around here. They usually are anxious to get an eyesore removed and will help where they can. What are your thoughts?”

He said, “I’m a sub-contractor. I know all those guys down at the Building Department. I may be interested in building myself, although I’ve never done it.”

“I’ll tell you what;” I said “how about you go and check out what needs to be done and if you can manage it, then you build the house. You could do it over the summer and it would be a great project for you and your boy.” (16 years old)

“This is the way we’ll do it. I want $5000. You give me $1000 as a non-refundable down payment and I’ll hold the property for you, exclusively. Talk to whoever you want, make sure that you want to do the project and then give me the balance. I’ll help you in any way that I can.”
“That sounds good.” He said. “Let’s meet tomorrow.”

The next day we met at a bank. He signed an option, we got it notarized, and he gave me $1000.

I waited a short amount of time for him to do some due diligence and he called to set up a closing at a diner. The day before the closing, I exercised my option and bought the property, using his $500 to buy it. Then he gave me another $4500 and I gave him the deed.

I spent about four hours on this deal.