Hey, guys. It's Greg Saunders with Oak Alley Capital, and I just wanted to give you a quick update on one of the deals that we just finished out. This was a very interesting contract for deed that we had received out of a hedge fund originally out of Seattle. The address on the property is 3225 McCrarey, so you can see the house right here. It was a two bedroom, one bath, about 800 square foot, but it did have a third bedroom that could be converted.
Now, what made me interested in this was, one, it was in Houston. Which for me being from Austin was great because I was able to drive to the house, put some eyes on it, and really know what I was talking about when I was bringing this deal to my fellow investors.
Now, also it was a relatively low balance deal, so we could get in and get out without getting too hurt even on a worst case scenario. Here are the numbers on it. We purchased the asset for $23,000. Again, that's out of the hedge fund. Now, the renovations were $750, and we actually didn't do any renovations. This was just the cost of the trash out because we went to the homeowner, or I tracked her down, I said, "Hey. Sign the property over." So on and so forth. Which she did because she didn't want the house anymore, but they left all their possessions behind, so I paid for someone on Craigslist to go out and remove the trash.
Apparently what I failed to mention was to take that trash and throw it away, so even though I asked them to send me photos of the work once it was completed, I didn't ask for them to send me photos of the front yard where they threw all the trash from inside the house. That's actually the cost of two trash outs.
Now, the other thing is there were back taxes. We knew about those, but it was an expense that we had to affront out of pocket. We ended up selling this as a wholesale deal. Now, I called up on Zillow and Trulia. Interviewed a couple of local realtors, and found one who ... He understood what wholesaling and investing actually was, so that was a great benefit, and I'll be working with Michael again in the future.
Now, when we listed this house we put it on the MLS for both wholesale for a traditional sale, and we offered owner finance to see which one would take first. Now, the sales price that we got was $45,000, and that was actually a cash offer to our wholesaler, so the way that I had it set up with Michael was I said, "Hey, I need $32,000. Here's our base. If you can bring me a cash offer over that $32,000, then I'll be willing to split that 50/50 with you."
He ended up getting a pretty good deal out of it, and honestly so did I because I didn't have to find that cash buyer. Now, I did have an investor, but they backed out about a week before closing, so this is what their profits would have been. Now, they would have made just shy of $1,200 in interest on this three month deal. That's $437.50 in straight interest, and then $750 for points on the back end, or a 19% annualized return on investment.
Guys, if you have some cash and you're looking to invest, and you're worried about these $200,000, $300,000 houses, come talk to me, and I'll be more than happy to show you how we structure these deals up. I mean, show me another stock or bond that will get you 19%. It's not happening.
The loan to value when it was all said and done was about 61%, and the final profits for me, because I self funded, was about $9,400, or 34%. We can annualize that out to be for 120% over the course of the year, but this, again, it was a really fun deal to do. It was a quick one. I was able to help the homeowner and keep them from losing the house to foreclosure.
As always, if you guys have any questions or you want a partner on this kind of deal or any of the others that we have, feel free to send me an email. Greg@GJSCV.com, or you can visit our website, and I'll talk to you soon.