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Example of a Real
Deal
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Here's an example of a deal that I personally concluded,
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I found this property in the newspaper, under the heading of
Trustee Sale. I contacted the attorney who informed
me that the 2nd trust was foreclosing and that both trusts were in arrears. The total debt on
the property was $88,000. I checked out the property and
the neighborhood and established the market value at
about $160,000. I analyzed the deal and decided I could
pay up to $112,000 (70% of value) and
still make a nice profit.
The
owners had abandoned the property and my efforts to find
them were unsuccessful. I therefore had to attend the
auction in order to buy the property. The attorney
started the bidding at $42,000 subject to $48,000 in
senior debt (1st trust plus total arrears). The total
opening bid was therefore $90,000. Since my
pre-determined total was $112,000, my maximum bid would
have to be $64,000 ($112,000 - $48,000). The required
auction deposit was 10% of the high bid, so I borrowed
$6,400 from my lines of credit.
The bidding eventually got
to $63,000 and I made my final bid at $64,000.
Fortunately, none of the other three bidders wanted to
go above $64,000 so I was the successful bidder. After
signing the Certificate of Sale and paying my deposit, I
immediately called the contractor to start the property
repairs. The repairs were completed in three weeks. I
then began marketing the property for $155,000 and
received a full price offer within one week. Settlement
was scheduled for 20 days later. I concluded this deal
within 90 days (from the purchase date to the settlement
date) for a net profit of $20,500.
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Physical
Information |
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Property Type |
Townhouse |
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Location |
Falls Church,
Virginia |
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Neighborhood |
Quiet, clean
neighborhood |
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Description |
3 Bedrooms,
2 full and 2 half baths, 17 years old, 1500 square feet
Two levels plus finished basement, brick and aluminum siding |
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Condition: |
Lots of trash,
worn carpet, dirty walls, some holes, broken windows, appliances in bad condition,
overgrown weeds & shrubs, ugly fence |
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Market: |
Good market
(properties under contract within a month) |
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Financial
Information |
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1st Trust |
2nd Trust |
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Balance:
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$42,000 |
$40,000
(foreclosing trust) |
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Monthly
Payment: |
$600
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$400 |
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Arrears: |
$3,600
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$2,400 |
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Market
Value |
$155,000
to $162,000 |
Based on
current sold listings |
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Bid Price |
$112,000 |
Purchased
at an auction |
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Sale Price |
$155,000 |
After
negotiation with buyer |
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Gross
Profit |
$43,000 |
$155,000 -
$112,000 |
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Expenses |
$22,500 |
Repairs,
financing, settlement, etc. |
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My
Net Profit |
$43,000
- $22,500 =
$20,500 |
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This is just one of many real life examples of how much
profit you can make by doing just one foreclosure,
money-making deal. You can do a deal like this once a
year, once a month, or as frequently as you desire. It's
up to you.
Get Started Right
Away!
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