One man’s junk is another’s treasure, but it only depends on the way you approach it.
Recently I bought some properties worth $4000 and $5000 in Michigan, Cleveland, Detroit, and Ohio. The houses were in very terrible conditions; completely gutted, no water heater, no furnace, no plumbing, and some even had all their copper completely ripped off.
I thought if I can sell them for 5 grand and just make $1000 on each deal, I will be well off. But this was not the case because all the investors were not interested in the houses. The houses were just too terrible, even the pictures were bad too. Some investors were concerned with the security of the place, while others were nervous about the whole process.
How Did I Finally Make Money from These Properties?
First, I found someone to drive around the houses, install lockboxes and nail up signs which said, “$1000 down, $250 a month” accompanied by my website address and my phone number. This was done on all the houses. It wasn’t long before I started receiving nonstop phone calls and started selling these properties.
The trick here was selling the houses for $20,000 apiece with $1000 down, $250 a month, resulting in 8% interest for 10 years. So, the buyers pay for the house for 10 years, $250 a month plus the $1000 upfront for the purchase of the property in a land contract. The best part is, the client will take care of the property and taxes.
Make Sure the Clients Know Exactly What They Are Getting Into
In my case, I drafted a long disclosure to let them know that these properties are in terrible condition. So, if they are purchasing them, they are purchasing them the way they are. You need to clarify that you are not responsible for anything on the properties.
It’s a win-win situation
It’s not every day you get to get into a house for $1000 and $250 a month. It’s usually higher and in tough neighborhoods, the rent can get as high as $1000.
If a buyer fixes the house, it will probably be worth more than $40000. So, this is not only a lifetime deal for them but also for you because you will make 5 times as much as you would have if you had sold them on your list. Also, you won’t pay taxes on the income coming in.
Buy Cheap Properties, Fix Them, then Rent Them Out
We bought properties for as cheap as $20,000 in Detroit and Indianapolis, fixed them and then rented them out for $900 a month to section 8. When you fix the properties and fill them up, you will have a continuous stream of income that pays off the property in just a few years.
Act quickly and know what to do. You can get a person you trust to manage the properties as you concentrate on other issues.
This investment method is new and requires some cash, but be assured you will enjoy the returns, you can even put it into your retirement account. Take advantage of the opportunities that are out there.