I tend to be overly sympathetic. My wife calls it having too big of a heart. Often times she’s able to reel me in and keep me from allowing myself to be taken advantage of, but not always. And while most times it backfires on me, I still maintain that I’d rather have a big heart than not.
In mid-October I managed to let my sympathy blind my judgement. A guy in a Facebook real estate investors group I’m part of, whom I’d never met, asked for help purchasing his childhood home from the Detroit tax auction.
To make a bit of a story short, I agreed to purchase the home and sell it back to him on a land contract. I won the auction for the house, paying $10,032 and about $1,100 in back taxes. I received the deed about a month after the auction (late November) and I hashed out the details of the land contract with the guy, we’ll call him Jeff, that included a $2,500 down payment.
Well, Jeff still hasn’t been able to come up with the down payment, and today I decided to go see what I own. I’d never been in the house or even driven by it. Jeff had told me there was some fire damage from his cousin (I think?) but it had been “contained to one room”.
On StreetView the house was clearly boarded up. But when we arrived the front door board was completely ripped off. The fire itself clearly was contained to the living room, but soot had traveled to other parts of the house.
The house, done up well, might be able to fetch between $50,000 and $60,000. But it’s likely going to take $30,000 to get there. That doesn’t include the opportunity cost of the money or my time. And of course, there’s always the risk that I’m unable to sell it for a profit.
No big deal right? Just hold it as a rental.
That’d definitely be my plan, but the house simply isn’t located in an area I’m interested in holding long term. It’s not a terrible area, just not one I’m focused on. I never planned to own this house myself… perhaps that was a mistake on my part.
So I’m now left trying to sell the house as-is to someone that is willing to put the time, money, and work into it. Wish me luck!