Have you seen the recent news story in which a man purchased a $330,000 home in Texas for $16? No, that’s not a typo – he “bought” a perfectly nice house for sixteen bucks. And it’s a true story, not fiction. What is going on here?
Here’s what happened: Like many nice neighborhoods across America, Flower Mound, Texas, experienced home foreclosures in recent years. And because of a tumultuous couple of years in the lending industry, the mortgage company that owned this particular house in Flower Mound meanwhile went out of business.
Kenneth Robinson somehow caught wind of this, and moved into the house in June. According to the story, he simply went to the Denton County Courthouse and filled out a form. Due to a Texas law called “adverse possession,” he was granted rights to the house for a $16 administration fee. Now, that’s a deal!
This isn’t just an interesting story, though. I wanted to discuss here because it’s a perfect example of the “silver lining” or “diamond in the rough” kind of markets we’re seeing right now – to the point where logic can’t always describe it. Foreclosure investing is a tough and risky business that can pay off big when done right.
While the average person can’t really expect the stars to align quite like they did for Mr. Robinson, there are ways to really take advantage of the opportunity that’s out there right now. What can we learn from Robinson?
Know your market
Mr. Robinson’s edge seems to have been his keen eye for what was happening in the neighborhood. He realized this home was abandoned and he discovered it was owned by a bank that was no longer in business.
Robinson’s other big strength was that he persisted in researching the laws around taking possession of a property. He could’ve just figured “why bother?” when there was no owner to buy it from. But instead, he dug and he acted on the knowledge he gained.
As an investor, I’d caution not to delude yourself into thinking you’ll stumble across a similar situation any time soon. But take the lessons to heart and realize that sometimes it really is all about knowing how and when to act on that big opportunity when it lands at your feet. Persistence outscores luck any day of the week.
Interesting times indeed! Check out the full details of Robinson’s story here.