All I Wanted For Christmas Was My First Deal To Close...
Hi everyone,
...but it didn't (sigh) although, I have faith that it will come(someday). This is a reprint from my post in another TCI Forum, any feedback from the pros would greatly appreciated.
ladyb
Freshman Investor
Joined on: 05/23/2003
Post: 8
Chicago, IL
Posted: 22:26 on 12-30-2003
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As you mentioned in your post, turning a profit in a tight market is tough, and this is where I would like to request some advice/strategies. In my area Southern Cook County, Illinois there are many worthwile foreclosures, or properties that are below market, usually the properties in the areas that I know re-sell (retail) for approximately $30,000.00 over the REO selling price. An example of what I mean is, this past summer I looked at a very nice REO that was in very good shape, only cosmetics and cleaning. It sold after about 30 days for $115,000. and recently in the last 10 days been listed in the MLS for $145,000, which is a very good representative figure in this area for this type of home. My problem is, when I approach potential investors to inquire about their interest in a wholesale deal they all say "if I buy a house for $100K to $$110K and put a few thousand in to it for repairs, the retail value isn't enough", meaning the $30,000 or so as in the example. I have approached investors who buy cash and they don't get excited for this type of return. They want - I bought at $100K and spent $50K rehabbing and sold it for $300k or at least this type of double your money scenario. One house I have tried to wholesale is currently REO, but not yet listed in the MLS, the Seller/Bank doesn't have possession yet, because there was a Section 8 tenant in place (the Courts allowed her to stay until after the holidays) and she would like to stay ongoing and hoped an investor with a holding strategy would buy the place, but none of the investors I've contacted will look at the $30,000 as worth their time. Considering the bank bought the house at the court sale at $102K and will want that much from their judgement of $132,000, which somewhat substantiates the value of $130K + with repair costs around $5,000. The neighborhood is great, not declining and the properties recently sold are all $135k+. Maybe it's just my approach, thats wrong, but I keep reading stories of investors that were happy to learn of deals that would return about $25K to $30K, but where can I find them? They don't buy in my areas Also, I know in investing this is considered a bad thing, but I feel really badly that I havn't been able to locate a buyer for this property and help this woman and her children stay in their home. I guess my question is more how much should be considered reasonable from an investor's point of view. Any suggestions are greatly appreciated?
Thanks much an Happy New Year!
From my perspective these deals sound pretty good. For the sake of argument, let's say you had a goal to make $120k in one year. Assuming it took 3 months to turn each deal and you could do them back-to-back (big assumptions I know), if you made $30k from each property you would achieve that goal. If the max investment was $120k for each, you have doubled your money in a year. So assuming you saved all of the profit, you could do twice as much next year.
I would like to talk to you as we may be able to help fund these deals.
Good luck!
-Brian
I Know how you feel. Working with limited marketing funds right now I can only look at MLS listrings and REOs.
I am usally 20 -30,000 less than what the banks wants. I have to tighten my repair estiment so close it scare my investor off. I look at 20-25 properties a week, make offers on 10-15 week. Only one was accepted, but the repairs were to close and it scared my investor www.off.My next approach, I've printed 5,000 full color postcard and using the apprasial disrtric to get address in neighborhoods I know of.
ANy ADVICE would help.
HNY...
Jim