What we liked about the deal
We liked that the land contract was secured by a property located in a desirable neighborhood, was clean and had a manicured lawn, which showed pride of ownership, was occupied and had a broker Price opinion of 40k.
The land contract had an interest rate of 9.9%, the unpaid principal balance of 38,302.98, principal + interest payments were 411.37 and the borrower was eight months behind.
We acquired the land contract on October 2016
We acquired it for 12,000.00 from a hedge fund. The borrower never responded our phone calls or letters. She made no effort to keep the property.
We began forfeiture of the contract in February, we received a favorable judgment in May with a redemption period of 90 days. On August the borrower moved out.
When our realtor walked into the property we were surprised because the property was clean, not one piece of trash was left behind. This is our first property we receive in such a fine condition. We decided that the best course of action was performing some minor repairs and selling the property retail.
On October 19, 2017, a Cash buyer closed for 34,000.00
On October 19, 2017, a cash buyer closed on the house for 34,000. The expenses were 15,527.62, as a result, we ended with a net profit of 15,020.67 after commission and closing cost.
Our return was 96.7% in twelve months
This is a home-run deal, and we can never expect to make this return consistently, but we are very pleased when we do. The main factor in achieving this return is that the borrower was decent enough to leave the house in move-in ready condition, clean and with the lawn mown. I really hoped she would have tried to make contact and keep her home, but who knows what her situation was.
This is an outstanding return as a typical note or land contract deal has a return closer to 24% and a life of 6-18 months.