Hey guys, Greg Saunders, GJS Capital Ventures, I am up in Kileen, Texas about halfway between Austin and Dallas and I am looking at a $10 house. This is a property where we did some direct marketing and we have a homeowner who is literally willing to sell the house over for the legal minimum of $10. Wanted to show you guys what a $10 house looks and just walk through whether or not I'm going to take on this property.
Before we start, some important numbers to keep in mind is yes, I am taking over buying a house for 10 bucks, but the underlying mortgage I'm taking over is for $37,000.00. The property here is worth probably $70,000.00 when it's fixed up but we have to take a look and see if after the repairs that it actually makes sense to come in and spend time and effort and four months of marketing to get the house where it needs to be. Let's take a look on the inside and I'll let you guys know when we decide.
... and re-key the house, and this is because the homeowner had lost the last key. Lookie-loo, we had squatters. I don't know why I'm on such a streak with having squatters in properties recently, but the house is about 950 square foot. It's going to be small. The flooring is not bad, but we're just going to come in, rip out everything, step on this mattress. You can see, at least they left the cabinets, and the cabinets are in good condition. We'll just paint over those. They did take a lot of the appliances. Dishwasher is gone. I imagine that the sink is still working, I'm not going to check under there. The stove got yanked. They tried to take the range hook and I guess they couldn't take the microwave with them. But, the walls are in decent condition. It's got old fixtures. I'm not seeing anything that has a lot of cracks, showing a lot of settling on the property which is kind of a rarity in this part of town.
Let's take a look. Here is where the water heater and the blower unit would have been, but those are gone. They have in the house ... This is a Jack and Jill setup where you have your own sink, your toilet, which that's how you know things are bad, and then a shared bathroom between. If we go all the way through, boom, here you go.
We'll go back into the hallway so that way you guys can see the masters. Other than the appliances, I'm not seeing much that's gone. The light fixtures are still here so I'm assuming that the lighting is in tact. We'll have to get up in the attic. Here is one bedroom.
A solid three bedroom house. The bedrooms are a decent size. The only kicker is that it's the one bath. The rents in this area would be for about $850 to $900. The underlying mortgage is about $480 a month, so it does have a little bit of wiggle room. Let me switch this back.
The property does have some wiggle room. This one is up in Kileen. It's off of Jerome, just north of Veterans Highway. It does have a pretty decent spread. We just have to get some bids from the contractors and see if it's actually worth putting in the time and effort through here. Off of our first bids, I'm guessing that yeah, we're going to take down the property. I'm going to bring on one of my investors and getting them funded and also get them they're really good return on something short term like this.
Our exit strategy is going to be turning this into a turn key rental. If that's not something you guys are familiar rentals, but it's one of our business models is, we will turn properties into rentals and rather than selling a house based on comparables or comps in the neighborhood, we go off of the income of the property. If you have a very low value asset, something that's $40,000 or $50,000 based on comps, but it makes $800 a month in cash flow, you can appraise the value based on that income. Rather than the comps of $50,000 you use the income approach and 1% rule and that's now an $80,000 property. That's what we're probably going to do with this one.
As always, if you guys have any questions or there's anything else I can answer for you, feel free to reach out, visit the website, gjscapital.com, and I will talk with you soon.