How I turned $500 into $30,000

That was quite a return on your investment, way to go CBR, that's what it's all about!

You're good CBR! LOL! I bet you were doing some fast calculating in your brain when you spotted those 2 extra bedrooms. What a find. That was probably one of the best $500 investments you ever made...so far.

I have a question?

I am at the FINAL stage of locking up a 2bdrm/1bath owned by Fanniemae (FNMA). We have counteroffered back & forth 6 times. They finally asked the realtor to write up a new, clean purchase agreement with all the addendums included (which they have verbally agreed to). The house had listed to start at $106,000. I am getting it for $85,000, with them contributing $1200 toward closing costs (because they wanted buyer to pay closing costs on both sides). My question is, the house is listed as a 2/1 936 sq ft living area. But that is just the upper level. The downstairs is the same size, therefore doubling the space, with a huge family room w/ woodstove/fireplace, laundry room, and 2 other rooms that could be bedrooms. Even though the lower level cannot be counted as living space, renters or buyers will still SEE it as such. WHY can this not be considered living space?
Also, another plus for me is that the listing said there was only wood heat. That was incorrect. The main source of heat is a gas furnace. There is also central air (which is uncommon for up here).

Rina

P.S. I thought the question was similar enough to your example that I could put it here. I hope I didn't hijack your thread.

Banks will only follow guidelines. Real estate agents will only follow guidelines. If the downstairs (I think you are talking about a basement) doesn't have egress windows (window wells) that allow someone to escape in case of a fire than they will not count it as livable space. If you want, add egress windows and make sure there are closets in the rooms downstairs and then it can be counted as a 4 bedroom house with livable space downstairs. Remember non-livable space still has a specific value to a homebuyer and to a renter, BUT it legally can't be listed as livable space. That will kill a properties hit rate during a search on the MLS if the potential buyer is looking for 1200 3/1 property. They may never see the great features of the property until you get the space changed to "livable". That is such a huge factor, and one constantly overlooked.

I want to flip the property FSBO. Usually, when I'm renting out a house with extra rooms (without closets), I'll advertise as 2+ bedrooms. That makes people at least call and ask. Then I let them know there are extra rooms, but not LEGAL bedrooms. Maybe I can do the same "For Sale".
I'll check into the cost of adding the windows and closets. Doubling the legal square footage might be worth it.

Rina

CBR! Good job! I wonder why anyone else didnt think to do that...it was such an easy fix.

Yeah..exactly. No closet means it is NOT a bedroom.

Some will advertise it out here as a den or a loft.

Also, if it's an addon and NOT down by a contractor with permits then they cannot count it.

I can't explain why somebody else didn't think about that all these years but that is why I love real estate so much...it is so inefficient.

And exactly why there's so much oppertunity if you learn as much as you can and start applying that to real life situations. That's where I'm at, at the moment. Trying to take all these years of study and start making deals and building my wealth up. Congrats on the find and the profit you made, I pray you many more deals in the future like the one you posted about here.

Thanks for sharing that with us. We can all learn something new from sharing your ideas and your success stories with us. Now that's something else to look for when looking at properties. I'm sure that's the best $500.00 investment you ever made. Great story!

Lloydsap

That's awesome, CBR. I'm going to start having my people look for 2+ for me now for sure. One could find a great bargain in this situation and do what you did.

Nice and economic way to add 2 br's to the deal. Good use of the hvac guy, was he a friend, because the rate seems dirt cheap? Anyway, solid deal....Jan

Always Walk In The Sun

Yes he is a friend of a friend. I am a cheapskate and I always get my rehab done for at least half price. It pays to ask around.

I didn't plan on selling the house. I bought it to rent out. I rent it for $850 per month and the tenants pay all utilites. I pay management, mortgage, taxes and insurance. Since my monthly expenses run only about $530 per month it has nice cashflow. It was kind of funny the day my property manager put the sign in the yard "for rent". The next day he called me and told me 6 families were coming to look at it that night! He called me later that night and said the first person through the front door said "wow this is nice" the second person through the door got out his checkbook and wrote the check on the spot! Man, I am thinking we should have asked a lot more for the property!

Wow. See this is why I Love this site. Everytime I log on, I learn something New.
Cbrpower, Thank YOU for that clear, awesome answer. Rina, thank You for asking it
(because it just happens, I had the same question), wmark1963 thank you so very much for the extra additional information posted about how ["Living Space"] in homes relates with Contractors, and Elena, I thank you so much for the additional footnotes.

For being a "fresh starter," you all make me feel "warm, and Welcome." And I just got here!

Many, Many THANKS!

-quicksilver
Now that's what I call - Success!

Additional Reference(s):
DG Circle Member Elena M-
http://www.deangraziosi.com/node/3355

DGAdmin-
http://www.deangraziosi.com/articles/marketing/craigslist-marketing-basi...

Quicksilver, I'm glad I could help you in any way possible. Please don't hesitate to ask questions, we're ALL here to help you and look forward to hearing your success stories!
God bless,

My sentiments exactely Quicksilver......

We are still haggeling with Fanniemae (FNMA) on our third property, and by reading this thread, it is obvious that I am still learning as I go.

Thanks CBR for posting your experience! I will be sure to do the same.

Regards,
Rohn Everson
DeJor Properties, LLC

That was an excellent story. One of the tools I use here is reading all the stories, I swear you can learn sooooooooooo much if you allow yourself too.

Take Action!

HEY EVERYONE THIS GREAT. YOU MEAN TO TELL ME IF I PUT A WINDOW IN MY BASEMENT THAT I JUST FINISHED, BY THE WAY I COULD ADD 1000 SQ FEET OF LIVABLE SPACE TO MY HOUSE @ $50 A FOOT? EVEN IF YOU COULD DO THAT TO EVERY HOUSE THATS AWSOME. IS THIS TRUE? I LEARN FROM EVERY LINE I READ YOU GUY'S ARE GREAT

When we sold a house in colorado, we turned a 3 bed into a 4 bed by throwing up one wall in basement and adding a closet. However, we were also told that we needed to install a small ladder so small children cold escape through the window in an emergency. I seem to be hering the same thing here in Montana. The windows can only be a certain height off the ground before it can be considered a bedroom. Anyone else hear about this or do I just pick the crazy states to live in?

BTW, good job on the TALD strategy you guys. It gave me a plethera of ideas to play around with for today!

Call a realtor in your area to get their opinion, but yes, if you have a finished basement in your house with windows that allow you to escape outside that can be considered livable space and will add value to your home.

Thats such an amazing story cbr, props on that deal. I can only hope to find something as amazing as that one day lol.

That kind of deal is available on a daily basis if you are willing to put in the time to find it. The main thing is just to be creative and have determination and you can accomplish anything.

I have a Rental Property I need to sell. 3brm/1bath huge fenced in backyard,
built 1960 old development. I just spent $15,000 on a new roof,sideing,and glutters. I had to refinance. It appraised at $68000 I cashed out w/55000 which I used for repairs and pay off some other debts. So far I have put out $20,000 or more in repairs in this property which I inherited from my parents.
The house was about 15yrs in irepair. It took me two yrs to find some good tenants. It cost me $1600 of after tenant repairs. I currently have tenants which are paying the mortgage I have no cash flow. I am a motivated seller. I need to sell. I'm asking 10,000 below market value. I'm hoping for an investor who would like to buy and hold it. Maybe sell it and make a decent profit when the market improve. I just need 48,000 to get out.. Any ideas??

desparate!!

I am paying $5000.00 to anyone who can bring me a buyer for my property. No cost to you. I will provide you with the Ad. and pictures. I ask that you advertise on “Respectable” sites only. Classifieds or send it to any of your contacts or other investors.
The property is located in Northern Minnesota. Total 90 acres mostly wooded with over three miles of wide groomed trails, creek, and pond. Excellent hunting. 2200sq. ft. ranch style 4bd 2ba home with many large roundtop windows. 2 car garage, medal hip roof barn with cement floor, electric, and well in barn. I will send you more detailed info. as well as pictures.
If interested respond to this post.

Thats a great deal.

Wow what an amazing deal! Thinking a little different! Thinking outside the box!

Congratulations!

Wish I knew then what I learn on this site everyday now!

Question - If you find a place that is advertised as say, 1300 sq ft and it is that size when you see it, but tax documents say 980 sq ft. Is it worth it to go have the tax document updated so you can resell for more. I think my answer is , yes?
________________________________________________________________________

*Never rip out a closet (in this case)
*Added SQ FT = $, if it is documented at the tax assesors office????
* Get a good agent.

Rented to own our first house from Frank, he flipped houses. He built a closet and sold a house!

The house, listed as a 1300 sq ft, 3/1.5. Frank told us he bought it to flip, but it would'nt sell because it only had 2 bedrooms. So Frank built a wall between the living and dinning room, built a CLOSET, dinning room became bedroom. Frank felt it was worth risking the lost dinningroom. The kitchen was plenty big to eat in. He was right. In that area folks needed 3 bedrooms. Which attracted me to his add, also creative, it read
"TRY BEFORE YOU BUY! 3 B 1.5 B family nieghborhood" I had 4 kids & needed a 3b. I did not care about a dinning room! He then asked us "will you be using an agent?" He knew the secret of an extra 300 sq ft & a 1/2 bath We said no, not using an agent, he was happy. So we moved in, rented then owned. Frank made more money for a 3/1 than a 2/1. Smart!

Later our life changed and we were in preforeclosure & scrambled to sell, got an agent to help.

What I learned after it was too late!

MY CLOSET MISTAKE & tax assesors office!
With my lack of knowledge and my sledge hammer I RIPPED OUT THE CLOSET! I though it made the bedroom bigger! NO! What I did'nt realize was I LOST A BEDROOM! Hanging the clothes in the hallway closet didn't bother me, I was too busy shuffling 4 teens around. But it bothered selling of the house.

The agent. We left it in her hands to sell quick for us. We were scared about the preforeclosure, very busy, hubby working tons of hours me with the kids. We never delt with an agent, she must know what she's doing! But what did we know. We told her 3 b 1.5 b 1300 sq ft.
Tons of agents with buyers trampled in and out day after day.

Weeks later, I said to hubby "why no bites with the huge parade going through here daily?"
Called my agent... "2b 1b 980 SQ FT" WHAT! I said NO NO NO... She said according to the tax assesors office it is. Thats what agents go buy. UGH.

I found out later (too late, foreclosure came) that the owners of 48 years, before Frank had added the 1/2 bath and 300 sq ft of space. But no record of that at the tax office. They had the old 2b 1b 980 SQ FT.

Agent called me to give her sympathy on our forecloser. We chated about the 3rd bedroom, she told me "no closet not a bedroom" "GEE" I said! Had she told me before, I would have put that closet back so fast you never would have seen my screw gun move!

Then she said we could have found a way to use 1300 sq ft part even though tax assors documents said 980. bla bla bla.
She was fresh out of agent school. Nice girl, she felt bad because her lack of experience did not help us much. We felt bad because we did not know to shop for an expeienced agent when it is "situation critical" we just grabbed the first that we could. If we were not in the preforeclosure situation we would have gladly been her first home sellers to get her new career going.

Well, lesson learned buy all of us!

Knowledge is power!

Hey Cbrpower, that's an awesome deal but just curious....

Are you THE Matt Larson??

Thanks for posting this information. You and Dean made me think a little different about these types of properties and I recently had purchased a 2 bedroom home that was easily converted into a 3 bedroom, thus increasing its value dramtically. I am in the process of doing a refi on this home and I believe it will make a great rental property to hold. Thanks for posting such great and insightful information. Good luck on all your current and future deals. Believe and Achieve! Indiana-Joe