Until a year ago, Bill McMachen, 71, had never bought or sold a foreclosed home. Then in 2011 he bought one for $12,000 and flipped it a week later for $18,000. "That went pretty good," he says. "So I said to my wife, 'I think I'll buy them all.'"
He was referring to all 650 tax foreclosed properties in Macomb County, Michigan. McMachen bought them in one fell swoop for $4.8 million at a July 31st auction. Afterward, he says, he told his wife, "Phew, I might be in over my head."
He'd seen the auction advertised, and had asked county officials if it was possible for him to buy the entire lot, which included 403 homes, 120 residential lots, 14 condos, 9 commercial buildings and some undeveloped land. They told him nobody had ever done that before, but that there wasn't any reason he couldn't. He snapped them up for no more than their combined back taxes.
The real estate newbie says he made his fortune selling yachts for 40 years. After the recession hit, he says, the yacht business suffered, and he started getting interested in real estate.
What's he going to do with all those houses? Resell them to investors, he says, most of whom he expects will rent them out to tenants.
How's McMachen going to manage all these properties in the meantime? There won't be a 'meantime,' he says: He's selling them too fast: "Last week I sold 181. This week, it'll be 150. In the third week I'll sell the balance. More people want homes than I have homes to sell."
He says he'll happily sell to someone who wants to occupy a home himself. "If somebody tells me the house was his grandpa's, or that there's some sentimental connection, I'll consider that."
Anybody who buys from him, he says, is going to get a better deal than they would have from the county. Whereas the county, he says, doesn't give potential buyers a chance to inspect foreclosure in advance, he'll be happy to. "They can look around and see what's there. Maybe there's a furnace missing. Maybe it needs $15,000 worth of repairs. We'll adjust the price."
McMachen says his wife has asked him what he intends to do next. "I don't know yet," he says. "I enjoy wheeling and dealing."