Tallahassee Townhouse Deal
by Marlene Green, Vice-President, CFRI
Editor’s note: if you transacted a good deal that you would like to share with us, please email email@example.com Please put “MREIA BUSINESS” in the Subject Heading.
Rob Arnold, CFRI Marketing Director and Principal/Real estate broker of sand Dollar Realty group, a CFRI
Business Member, is always marketing for deals to purchase anywhere in Florida.
One of his niches for targeted advertising is insurance claim properties which includes sinkhole, fire and damaged buildings. He got a lead on a Tallahassee townhouse that came from an online ad that he ran regarding sinkhole properties.
The property is located about three miles from Florida State University. The seller was a mother and her son who bought the property in 2006 for $144,000.
The son lived in it for four years while he was in college.
The property was a 3 bedroom, 2 bath end unit in a 3-unit building. It was listed in the MLS in Spring 2012 as a
short sale for $89,000 but in June the property started showing some cracks and settlement which prompted
the seller to contact his insurance company.
Ultimately the seller’s mortgage got paid off and the short sale was
canceled. The son had since moved to Orlando and came across Rob’s company when searching online.
The asking price was $30,000 as-is.
Rob was not very excited about buying a townhouse located 5 hours away but figured since they had called him and were motivated he could at least negotiate with them.
They ultimately settled on a purchase price of $18,000 and it closed in November 2012.
The challenge Rob had with a property that far away is that he couldn’t manage it properly or get his contractors to go there to do work. so he had to find someone local who could help him. It was three weeks from contract to closing, so during that time Rob went online and made a few phone calls until he found an independent broker who could take photos, help him get a home inspection done, and manage some minor rehab work.
After closing, the Tallahassee broker he found hired someone to remove the old furniture, do interior cleaning, and pressure wash the exterior. Because this property was so far away and the damage was minor, Rob decided not to fix the foundation issues (the cost would have been about $27,000) and to just sell the property as-is. ARV was $90,000. Rob listed it as-is at $49,000.
After about a month, Rob got an offer from an investor for $54,000 cash but they wanted a 45 day closing and only a $100 deposit. The offer seemed flaky but Rob figured for an extra $5000 he could wait a few weeks and take a chance. It was during the slower Christmas season anyway.
The buyer did end up flaking out which did not surprise Rob! While the property was pending with this first prospective buyer, the next door owner/neighbor who Rob later found out was the community nutcase
sent out a certified letter to Rob, his broker, the previous owner, and the HOA was threatening to sue everyone regarding the building’s condition and potential health issues due to mold.
That put a good scare into Rob and his broker until he talked to the HOA President who told Rob that this guy has been threatening lawsuits against people for over 10 years. Even so, it turned Rob into a motivated long-distance seller!
Rob’s broker ultimately ended up finding a buyer through his own marketing who gladly paid $35,000 cash to buy the property from Rob! As an experienced real estate broker and investor, Rob shared that the most valuable lessons to learn from this deal are that:
(1) When doing a deal from a distance, finding the right local person to manage for you is critical.
(2) One must be extra cautious when buying attached buildings because you might have wacky neighbors. Negotiate the price down even further as you take on that unknown!
Here is the summary of Rob’s long distance deal:
Acquisition price: $18,000 (11/16/12)
Acquisition costs: $1,004 (incl. inspection + fee to Tallahassee broker)
Trash out, clean up: $ 360
Holding costs: $ 895
Closing costs to sell $3,938
Sold price $35,000 (4/1/13)
Net profit $10, 803
Reprinted Courtesy of the Central Florida Realty Investors. Visit www.CFRI.net From the November 2013 issue of the CFRI Newsletter.