There’s something going on with Recontrust and Bank of America lately, and it has implications on trustee sales and short sales in Washington State. Jesse and Dennis discuss what they see going on.
The link that Jesse mentioned from the Attorney General’s office: http://www.atg.wa.gov/pressrelease.aspx?&id=28750
Oct 26th, 2011 by Pickett Street Properties Team
Jesse has shared his story of buying a home at auction and selling it for profit, and now it’s Dennis’s turn! Dennis is one of the co-founders of Pickett Street Properties, and in June he bought his first real estate investment – a split-level in Bothell that was flipped for profit. In the video below Jesse talks to Dennis about his first real estate investment and the motivation behind using our current market conditions to build wealth for his family.
May 9th, 2011 by Pickett Street Properties Team
On August 27, 2010, I bought my first investment property at auction. I happened to be in the Beartooth Mountain Range of Montana, void of cell phone reception or email access, so I didn’t know about my purchase until I received my business partner’s voicemail days later.
The property was a split-level in Lynnwood that had been considerably updated since the last time it was sold. My business partner was able to get it for $208,767 – a dollar over the minimum bid. Considering that it had already been remodeled, our hope was that we would have it back on the market by the middle of October with minimal investment.
What ended up happening was drastically different. The home was occupied by the former owners, and according to state law they had 20 days before they had to vacate the property. We tried making contact with them several times, but there was a language barrier, and the wife wouldn’t allow us into the home until her husband (who was often gone) was available.
On September 7th, 11 days after our initial purchase, I stopped by the property to find that the occupants were gone. And so was the kitchen. And the cabinets, countertops, railings, crown moldings, doors, door casings, furnace, hot water heater, appliances, toilet seats, and carpet.
Imagine my horror. We had over $50,000 into the purchase of the home already, and each month that we couldn’t sell the property cost us money. We also bought the property thinking that we wouldn’t have to put much into it – only to have it turn out that we needed to put just about everything into it.
Luckily I had wise counsel. My real estate investing mentor, John McCants, also happens to be on my team. He instructed us to get homeowners insurance on the property as soon as we purchased the home at auction, and to make sure that it was broad-form insurance coverage that covered theft and vandalism. It took us a little over ten weeks, but we received a settlement check around Thanksgiving, and we started work on the home almost instantly.
It went on the market on January 20th and sold in 13 days. The initial buyers walked after their inspection, so we replaced the roof and put it back in the market, and this time it sold in a little over a week.
The property closed on March 22nd, almost 7 months after our initial purchase. The property sold for $296,000 less $6,000 in closing costs, for a net of $290,000. Our total acquisition costs were $220,367.68. Our carrying costs were $11,502.15. Our fixup costs were $66,035.54. The insurance check covered 90% of this. Our total net profits for $33,635.16, so my partner and I each made $16,817.58. Spruce Project Before-and-After Slideshow
What happened to us on our first investment property had only happened to our mentor once in 20 years of real estate investing. It’s not easy to forget the pain and suffering we endured in those seven months, but considering that we still made money despite so many things going wrong has given us a strong resolve in continuing forward. My business partner bought another investment property at the end of December, and it’s sale should close this Month. We bought another joint property in April, and we hope to have that on the market sometime in July. I want to buy three to four properties in 2011 at trustee’s sales, including a different home for my growing family.
We’ve since helped over a dozen people buy properties at auction, and while they aren’t for the faint of heart, there is money to be made for those that have the fortitude to give it a try. There is risk – to be sure – but even if things don’t go as expected, if you buy wisely there should be enough potential profit to cover unexpected expenses.
May 4th, 2011 by Pickett Street Properties Team
Dennis Pearce and John McCants of the Pickett Street Property team (and Keller Williams Realty Bothell) discuss the process of purchasing homes through foreclosure auction (aka trustee’s sale) in Washington State.
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