It feels good to have a win. I know it sounds cliché, but working in real estate really can feel like a roller coaster. Sometimes you just have to take a minute to appreciate when things work out better than expected. While I don’t want to get ahead of myself, I feel like this might be one of those times.
You can see our listing and final pictures here.
It was a quiet day in December when an email from our local wholesaler hit our inbox. “Large Bel Air Property in Need of Updates,” read the subject line. Curious we opened the email and started reading through the contents. From the pictures it looked like any other foreclosure: trash was strewn around the house, walls were scuffed, and appliances were missing. It looked like it could use a good cosmetic face-lift from the pictures. While the advertised price didn’t leave much room for work past cosmetics, it was enough to make a visit to the property worthwhile.
Evan jumped in his truck and headed north to Bel Air. Upon arrive he gave me a call, “Hey man, this house is in surprisingly good shape. We can budget for some basic plumbing work, but after that it’s mostly paint, fixtures, appliances, and a good deep cleaning. We’re probably looking at a $20k repair budget, if you can make the numbers work it’s likely worth a buy.”
Evan’s budget was enough to get me started. We had already determined the property to be worth ~$400k after repairs. Comparable sales in the neighborhood were a little tough to determine since not much had sold over the past year, but knowing that it was in a good school district we were reasonably confident in our ARV. After throwing our numbers in the spreadsheet we knew we needed about $20k off the wholesaler’s advertised. After talking it over we decided to give it a shot. Evan picked up the phone, called Jimmy the wholesaler, and thanks to a little back a forth we were able to make a contract happen.
Victory! Now we wait…
Buying a property from a wholesaler can be both exciting and frustrating. Many of these properties are foreclosures bought at the courthouse steps. Because Maryland is a quasi-judicial state, foreclosures have to be approved by the court before title can be transferred. Like everything else that the government does, this is a long drawn out process that can feel like an eternity. These contracts require a large deposit, often 10% of the purchase price, that must be held until the house is closed on months later. The worst part is that as you’re waiting you have to pay 7% interest on the purchase price of the property. This can add up to thousands of dollars at the closing table and something you have to take into consideration when making an offer.
311 Sedgefield Ct took a little over 6 months before the courts gave final approval. This may sound like a long time but is actually rather average for a courthouse steps transaction. We were fortunate to be using Bret and his team over at Definitive Title who are pros at getting these closed. We finally walked away with the keys on
Just like lady luck, the real estate market is a fickle mistress
A lot can change in a matter of 6 months. Lucky for us the market around Bel Air had picked up in 2017 and we had a fresh round of new comparable sales that brought up our estimated sale price.
As mentioned before, we were pretty lucky that this property was in pretty good condition. Out of the gates Evan had cleanup crews and a dumpster over at the property. Once it was cleared out we kicked in with the painting crew. Doors came off their hinges, trim was recalked and the first coat was put on in a matter of days.
The house had been vacant for the better part of 4 years so the outside was filthy with the amount of soot that had accumulated. I got out there with a power washer and it was night and day comparison. By the time I was done the back and sides of the house looked brand new. Unfortunately the pump on my power washer failed when I reached the front of the house and had to go into the shop. Luckily Evan never stops working and was able to get up there and knock it out.
Now that paint was complete it was time to wrap the project up. Mike, our electrician, got to work replacing the light fixtures to give the house a more modern feel. At the same time our plumbers were busy replacing the bath trim kits. A call into the house cleaners and the renovation was complete!
Thoughts on the Property
I’ll be honest, this property caught me by surprise. I’ve always seen myself as an “efficiency” kind of guy. For my personal residence I like houses that serve a Unitarian purpose. Like a native american and the buffalo, I like homes where no room is left unused. The idea of owning a formal dining room that gets used twice a year feels like a waste, but a kitchen that features an eat-in dining area is something that I can imagine using day-after-day. This approach often puts me at odds with my fiance, Megen, who loves the idea of entertaining family and having a full living room to display books and decorate with formal furnature. Maybe one day we’ll see ourselves in a McMansion like this one, but for the time being lets get this sold!