Results from Certified Letter to Unknown Occupant [Letter]

 

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease.
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Back in November I wrote a blog titled My First Tax Deed Purchase and described the situation of an unknown person living in a property I just acquired through the Escambia County Tax Deed Auction in Pensacola, FL.

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After consulting with my attorney, I rectified the situation by drafting the letter below. This is a copy of the actual letter I sent to the person occupying the property.

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease. Two months after signing the lease the eviction process began. Related Articles below go into more detail on how the evicted tenant destroyed this Pensacola property and our improvement efforts afterwards. Spoiler Alert: we rid the kid filled neighborhood of one of the most worthless human beings I’ve ever met. A drug dealer/user who allegedly was stealing his mother’s disability checks.  

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Evicted Tenant Destroys Property [video] – 6 Month Follow-Up

And now for the after….we now have properly screened tenants (which are paying rent on time), an improved property and a decrease in criminal activity for the neighborhood.

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In February I posted a horrific scene of a recent tax deed purchase in Pensacola that turned into an eviction, that turned into the tenant destroying the property [original post here]. After a few short months of demo and installing a different mobile home, we now have properly screened tenants (which are paying rent on time), an improved property and a decrease in criminal activity for the neighborhood. Let’s break down some #’s.

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Our Cost Summary:

The debris, oh man the debris. The rollaway dumpster guys in Pensacola made some bank on us. We had a total of 8 dumpsters to haul away 14.9 tons of trash. This was just the trash on the outside, not to include the demo of the mobile home that was original to the property.

Nowgoing back to our Tripod of Adopted Investing Criteria:

  • Cash Flow: ✅
    • After all expenses (repair/maintenance, vacancy, insurance, taxes, property management) are considered for this property, we’ll still cash flow $375/month.
  • Cash-on-Cash Return: X
    • With $375/month in cash flow, that is $4,500/yr. Dividing our cash investment of $40,716 by our cash flow of $4,500 we yield an 11% CoCR. On this project, our clean-up and demo costs were much higher than anticipated. Although an ok return at 11%, if we had more accurate cleanup/demo costs during our napkin test, we would have passed on this property as it doesn’t yield our target of a 15% return.

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  • Asset Acquired @ 20% Under Market Value:
    • This property now appraises at $57,000 and with our all in costs of $40,716, we are almost at 30% below market value.

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