Anyone here doing Rehab Properties?

[Nate R]

Just wondering if anyone on the board is doing rehab properties.

My brother and I will be looking to buy our first one in the next few months. He's got a rental now that we've done a lot of work on and such.... Be doing the rehab work ourselves.

[Jeff]

Oh.  I thought you were buying a place to rent out to that Morford guy...

[MELK-MAN]

Just wondering if anyone on the board is doing rehab properties.

My brother and I will be looking to buy our first one in the next few months. He's got a rental now that we've done a lot of work on and such.... Be doing the rehab work ourselves.

How will you be determining if the price yo pay is low enough to justify repairs/rehab ? I have rehabed a few homes (15 or so?). Now i buy apartments to hold long term.
You must factor in buying and selling expenses and the holding costs as well (monthly mtg payments unless you have enough $$ to pay cash) ..

[Nate R]

Well aware of the #s involved. (At least, I think so) Have a fair idea of the man hours required. We started looking last year, but other things came up. I've probably looked at 200 homes, and since then have a better idea of what to look for in the ad, etc.

You've done 15? SFH? Did you do the work or get a GC, or act as the GC?

The plan is to do a few SFH and maybe duplexes, and the start going for multi-units. There are plenty of 4, 8, and 12 plexes in need of rehab around here.

Don't have enough to pay $ between us, but his credit is really decent. He's losing his job Oct 1, though, so he needs to get another one before we can attack full throttle.

Back to the price:

Well, our plan is to determine the ARV through comps, and maybe a bit of influence from the taxed value.

                                ARV- profit - Holding costs - buying costs- repair costs - realtor's cut - contigency factor = Max amount we can pay.  

Make sense? That's the way we like to approach it.

BTW: What kind of profit did you pull, on average? Mind giving me some of your #s? (Purchase price, selling price, profit, total time from closing to closing)

I'm interested in seeing if we're being realistic on some of our #s. Email might be easier for all that...... ninja250nate@yahoo.com

Thanx!

 

[BC61]

better money would be in holding the propeties and renting. if you want to go this way figure the purchase price based on the net opperating income(noi) the property will generate. there is no speculating in this formula. figure in all cost to purchase including rehab, closing and financing of property. take the gross rent, subtract expenses (vacancy factor, management fee, maintenance reserve, utilities, taxes & insurance) this leaves you with your net opperating income. if the noi is greater than your payment for the property, inculding rehab, closing and financing cost than you are making a profit. how much of a return on investment? depends on how much out of pocket cash you have to put down and your financing percentage. you can garuntee your self you will be ahead if you determine your purchase price based on noi.

[MELK-MAN]

Well aware of the #s involved. (At least, I think so) Have a fair idea of the man hours required. We started looking last year, but other things came up. I've probably looked at 200 homes, and since then have a better idea of what to look for in the ad, etc.

You've done 15? SFH? Did you do the work or get a GC, or act as the GC?

The plan is to do a few SFH and maybe duplexes, and the start going for multi-units. There are plenty of 4, 8, and 12 plexes in need of rehab around here.

Don't have enough to pay $ between us, but his credit is really decent. He's losing his job Oct 1, though, so he needs to get another one before we can attack full throttle.

Back to the price:

Well, our plan is to determine the ARV through comps, and maybe a bit of influence from the taxed value.

                                ARV- profit - Holding costs - buying costs- repair costs - realtor's cut - contigency factor = Max amount we can pay.  

Make sense? That's the way we like to approach it.

BTW: What kind of profit did you pull, on average? Mind giving me some of your #s? (Purchase price, selling price, profit, total time from closing to closing)

I'm interested in seeing if we're being realistic on some of our #s. Email might be easier for all that...... ninja250nate@yahoo.com

Thanx!

 

Here is a link from a similar thread just the other day.. some of what your asking is in this thread.

http://forums.13x.com/showthread.php?s=&threadid=60573

You will find MANY people and companys buying homes to rehab. This has driven the prices up to a point that unless you really are quick to act and can close with cash and no contingencies you will not usually get the real good deals. You can find homes to make money on, but after all is said and done you may find you would have made the same amount had you been a realtor making your comission. This is not productive in my book since you are taking all the risk and putting the work into it.
I buy as many units under a roof i can. If i did not have a very good business appraising houses (thats what i do, and how i know if im getting a deal or not).. and managing my own 36 units, i would possibly be out there rehabing myself. I never did the work on my rehabs 8-10 years ago. I had some guys that did all my rehab work. AC and electrical i would sub out.

[Nate R]

better $ holding? Certainly.

Not when you need/want cash quicker, though. I need some for a reserve fund. I have basically 0 extra dollars right now. Holding gives more money in the long run, but right now we don't want the  money tied up real long. But, again, once we get into multi unit places after a few houses, definitely going to be doing the buy, rehab and hold.

Rehabs are getting purchased, yes. But us doing the labor helps a bit. Only one group of people profits, not 2.

Currently, there are enough foreclosed, etc homes in Milwaukee to find deals that wil result in reasonable profits. That doesn't mean the good ones don't get snatched up quick, but there are homes and buildings around.

We almost bought one for 10K which had an ARV of 50. Needed about 15K of work. 15K for sure outta that one in profit. Had an accepted offer and such with the owner, but then within days the bank foreclosed on his property, and wouldn't accept that amount for the property.  

[Nate R]

BTW: Goals are similar for me and my partner: Being able to have the $ in savings and residual income to quit our dayjobs ASAP.

I know that doesn't mean quitting my job as soon as we buy or sell our first house.

But, I want to be financially secure by the time I get my BS degree. (Probably in 2009) Thus the thought is that I'll never need a job based off of that degree. I should be making as much at that time as a starting salary for a Mech Engineer.
 I then could do what I like, or nothing at all. I'm going to school for the education, not for the employment oppurtunity the degree offers.

But, I'll have to work my butt off to get there. 5 years of college full time while doing rehabs, and running the slider business.

[motomadness]

Go Nate, get busy!

[VPFL]

Before I purchased my house I sought out advise from city council members and other 'community involved' people. Since I was buying in an area that was referred to as 'in recovery' (ie: the hood), I wanted to make sure the investment was a wise one. I found that there was quite a bit of money that had already been allocated to my area for 'clean up' and beautification. In 5 years time, my house has gone from 70,000 to 180,000. The only thing I have done is refinish hardwood floors and redue the bath.

While realtors or that community usually have an inside track, their main objective is to sell the house. If you do research that is outside the norm, you can find quite a few diamonds in the rough. I am now looking at properties in Colorado (just outside of Vail). I think there is alot of potential there.