When people ask me about buying rentals in Indianapolis, I like to tell them stories like this one.
Back in 2005, I found a cute three-bedroom foreclosure and bought it for $26,000. It didn’t need a lot of work, really. The basement was full of junk, the place smelled like dog urine (it made my nose and eyes burn) and the previous owners had left trash all over the house. It needed to be totally redone but it was structurally sound, and the major operating systems were in good shape, as was the roof, siding and garage. So I jumped on it.
It didn’t take long to complete the rehab . . . I planned ahead and got it done quickly, spending about $5000. After the purchase, every day that goes by is a day I’m not making money, so I organize myself and my sub-contractors and get the rental up and running.
My first tenants wanted to be buyers, so Idid a land contract with them, also called a “rent-to-buy.” It didn’t work out — they defaulted — so I got them out and rented to a wonderful guy who’d fallen on hard times. Bill had been in an accident and wasn’t able to work for two years, due to multiple major surgeries. He tried to keep up with medical bills and just couldn’t. He ended up losing his home, etc. But now he was back on his feet (literally) and had a good job.
I started renting to him about two years ago and he called yesterday and asked about the possibility of buying the house, below:
Of course, my first question had to do with his credit situation. Bill told me he had been working on credit restoration, and also that he was going to receive clost to $20,000 in monies (disability payments) that were owed to him from the time he was injured and out of work. He wanted to know how much I’d charge him for the house so I did a quick review of comps in the area — comparable homes for sale and sold in the area — and came up with a $50,000 price tag. I felt this would hold up to an appraisal by a bank. So, he’s working on it from his end, and we’ll move forward. He’s excited and so am I. I’ll take that money and run! Maybe pay down some debt, buy another rental . . . we’ll see.
But, I’m so happy for him. For Bill, the American Dream is alive and well. This is why I love what I do . . . 🙂