I have purchased a couple of homes over the past year and followed Lonnie’s book to the letter. Here are the results:
Purchase 1999 Fleetwood 3 bedroom in a park with lot rent of $200 per month. Paid $4,000 cash and spent another $1,000 on fixup. Put the home on the market for $10,000. No buyers for two months. Lowered the price to $8,000. Sold for $7,500 with $1,000 down and payments of $250 at 10% interest. Received one payment from the buyer and then he walked off and left the home a mess.
I spent another $1,500 to fix it up again and have tried to sell it with no success for 3 months. I started at $7,500, now I am down to $6,500 and will take $1,000 down. This is frustrating.
Total cost so far:
Cost of home & initial fixup - $5,000
Lot Rent for 6 months - $1,200
Cost to fix it up again - $1,500
Total Cost so far - $7,700
Total Received from first buyer - $1,000 + $200
Net Cost so Far - $6,500
This is a nice home and I am afraid that I will keep getting it back in worse shape each time it sells and I will keep losing money.
Home Number 2 - 2000 Clayton - 3 Bedroom - Purchase for $6,500 cash and in excellent condition.
Lot rent in park is $195 - Offered it for sale and sold it within 1 month for $11,900 with $1,500 down and financed the rest at 10% interest with payments of $250 per month.
Buyer made 3 payments and then stopped paying. It took me 3 months to get the buyers out and I had an attorney take care of the foreclosure process. Once I went back in the home, it was trashed. They put holes in the walls, the carpet was ruined, the appliances were gone, their are roaches everywhere.
To get this home back to the condition I sold it in will cost me about $4,000 and every night of my life for 3 weeks after work.
Here is where I stand on this home:
Purchase price - $6,000
Lot Rent and Late Charges - $1,200
Cost to fix up - $4,000
Attorney Fees - $900
Sweat Equity - about 40 hours
Total Costs - $12,100
Less payments received from buyer - $2,000
Net Costs - $10,100
Now I will have $4,100 more in the home than when I started.
My questing is… is this what this business is really about? I remember reading in the book something like it is ok when your buyer does not follow through. You can sell again and increase your returns. At this rate I am going to bankrupt myself on these returns.
Zachary Michaels in San Antonio