$20,000 Cash, $900 Monthly Cash Flow and $45,000 Equity

You gotta love bank foreclosures! Recently, my partner and I purchased a two-family home from a bank, post-foreclosure. Prior to the foreclosure, the bank was trying to sell the property for $133,000 (the outstanding mortgage). No offers. They then took the property to the county courthouse to auction it off for an opening bid of $30,000. No offers.

They knew we were interested in the property, so they offered to sell it to us for $15,000. We countered with an offer of $12,000, which was accepted immediately. We are were also responsible for $8,000 in back taxes and repairs, which included the replacement of all plumbing (copper is like gold in some urban areas), which cost us another $12,000. [$32,000 total cost]

We have been approved (very conservatively) for a mortgage of $53,000 and have rented the two units through a government housing program for $1,795 gross rent. Our net income from this property is about $900 per month.

[Editor’s Note: With a Cap Rate of 10, this building is worth over $100,000.]

By CREOnline Contributor

A content contributor to the original CREOnline.com.