David Interview Part II: Complete House Renovation Improves Kentucky Neighborhood

John: And two bathrooms. So it’s a three-bedroom, three-bath house.

Do you have multiple tenants in this property?

David: No, it’s a single-family home.

What was great about this house was it had been depressing an entire area for almost 40 years. And the pastor that lives next door was trying to figure out what to do with it because it looks so badly.

He told me that there were people that didn’t want to come to his church because of this particular home. And we’ve fixed it up and turned it into a showplace and everyone in the entire neighborhood is thrilled with it.

John: Wow. Now when you said you found it online, was that through an auction? Can you walk us through exactly how that and where you found that deal?

David: It’s a site called LBAR, which stands for Lexington-Bluegrass Association of Realtors. And they post homes that are for sale on this website. You can search by area by price by bedroom, however you want to look for it.

And I just found the house because it was so inexpensive. I mean, $11,000…a lot was worth that.

John: Would it be a safe assumption that in other states, there’s an equivalent website with those particular states and their board of Realtors there?

David: I would think so.

John: Okay, so that’d be a good takeaway for folks to research that to find an opportunity for additional investments.

So it just so happened that the property was next to the church of a pastor that you knew the seller, who was the seller of this house? Was it a probate? Was it a state? What did that look like?

David: It was an out-of-state seller. It had problems with it and he just wanted to get rid of it. Basically, it did not have a foundation on two sides of it.

We jacked the house up, took the block that was laying on top of the ground away, dug a trench, poured concrete, put in new concrete block, and then lowered the new walls back down onto the new foundation.

John: That’s an extensive rehab; do you have an idea about how much money did you actually put into it?

David: $40,000

John: So you’re in it for around $52,000 and some change? And then how much are you renting it for on a monthly basis?

David: $1,200 a month.

John: If we factor in operating expenses – and I understand the maintenance is minimal on these houses because of the rehab you’ve done.

Sewer, water, and garbage will probably be around $1,100, which gets you to about $13,200 after all expenses on an annual basis, which is tax-exempt in your IRA. And if we look at that return on investment, that’s over 20 percent cash on cash return on investment, correct me if I’m wrong?

David: That’s right in the ballpark.

John: It’s interesting, I got a chuckle here. Because David, I really admire and appreciate you. You’ve always led with the reason why you’re doing the deal. And it’s it never seems to be about the cash on cash return on investment in the figures, it always seems to be for some other reason.

But the money always works out. In the end, the financials always seem to work out for you. In the end, this particular transaction, it sounds like it was a project to beautify the area, there were obviously a lot of parishioners there that were dissatisfied along with the church as a whole of the site of that property, you came in and beautified it did a great thing for the community.

And then you’re obviously also doing a really great thing for yourself. So I wanted to make sure I recognize you for that as well beyond just being our Investor of the Year in 2019.

Obviously, you’re doing some incredible things for the community. And part of that is with self-directed IRAs, which we here at Equity Trust Company really believe in and really appreciate.

David: Well, the Lord Jesus did not go to all the trouble of redeeming me so that I could make money. He redeemed me so that I could reflect His light into a dark world. And he’s using this real estate in order to do that into people’s lives.

Read David Interview Part III: Great Room Renovation and His Guiding Principles for Investing

Video: Watch the entire interview with David.

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