I know, I know. The title sounds like clickbait, but it’s actually not. This is a deal that most people would refer to as a Grand Slam. I use this deal as an example whenever I explain to people why direct mail is so important.
Direct mail has been my largest channel of deal flow since I began wholesaling back in 2013. The reason is simple: You get deals with no competition. Now, this isn’t always the case. In fact, nowadays, most sellers will call multiple investors like me before making a decision… but not always!
I want to go through this particular deal in detail to show you exactly how we got it done and everything we went through to get it closed. Deals like this aren’t easy even when they fall into your lap. There are always some quirky aspects that make it hard to close and this deal was no exception.
This lead came in from a letter that I sent to an absentee owner. He actually lived in Pennsylvania and his 2 properties were located in the Columbus, Ohio area.
The situation is as follows: An old owner, let’s call her Cruella de Vil, thought she was going to need to file bankruptcy about 5 years prior. To shelter these properties from her bankruptcy, she kindly “quitclaimed” them to a friend (let’s call him Kristoff). Cruella told Kristoff that she would keep up the properties, pay all the insurance and taxes and at a later date, he would need to quit claim them back to her. This arrangement continued for about 4 years and no one seemed to mind.
Now in the meantime, Cruella filed for a bankruptcy, but it was rejected. Apparently her situation did not fit the requirements for a bankruptcy. Come to find out, this is actually a good thing for Cruella. Quit claiming properties to avoid losing them in court is a felony, so if the bankruptcy would have continued, she could have been accused of fraud among other charges.
Anyhow, after 4 years Kristoff starts getting tax bills and fines from the city for not keeping up his properties. Kristoff calls Cruella and explains the situation and she refused to pay for taxes or fines. Kristoff spends $11k of his 401k money to pay the taxes on these properties that he’s never even seen. As you can imagine, Kristoff is not very happy.
This is where I come in. Kristoff gets my letter in the mail, calls me and explains the situation. He wants to sell 2 properties for the $11,000 he had to pay out of his 401k. I analyze the properties. The first is a SFH in a great school district and worth about $130,000 all fixed up. The second is a small 2 bed condo in that same good school district and worth $45k in good condition. I agree to purchase both and we sign a contract. Then the complications begin.
When we sent the purchase contract to our title company, not only did they find 9 liens that were outstanding, but also they realized that Cruella was married when she quit claimed these properties to Kristoff. Her dower (husband at the time) never signed the documents. For those of you who don’t know, a dower is about ⅓ ownership of a property. If we didn’t get that taken care of it could have come back to haunt us.
These liens were another issue, because we couldn’t access the information without Cruella’s consent, and as you can imagine, she is NOT HAPPY about this situation and is completely unreachable. So we knew there could be $30k or so in outstanding liens, but we can’t tell if they’ve been paid partially or in full and we are at a standstill.
My real estate attorney wanted us to file what is called a “quiet title action” to bring all the lienholders out so we knew exactly what was owed. He was going to charge $2,000 just to file this motion, and if something significant showed up we would be out that money anyway. So instead of paying for that, I started calling around to every local government department I could find: The auditor, the recorder’s office, the clerk of courts, etc. I finally found a lady who admitted she could not tell me how much was owed on the liens or if they had been paid, but if I went on their automated phone system and pressed the button to make a payment, the automated service would tell me if there was a balance or if the account was closed…. YAHTZEE!!! I called the phone service and every account she had owned on had been paid in full!
As for the dower interest we still needed, I googled the Husband (now separated from Cruella) and for a measly $1200, he signed his dower over to my friend Kristoff so we could complete the sale!
At the end of the day, I ended up with 2 properties worth $145k, sitting as is, that I had paid a total of about $13,000 for.
I tell this story not to impress, but to impress upon you: This is what is possible when you use multiple marketing channels and do WHATEVER IT TAKES to close a deal!
Happy Mailing my real estate friends!