Rehabbed! Now What?
I am about done with my 1st rehab. Now what?
I need to sell this one to get the funds to do another. I don't want to get into my personal funds to fund my REI. I want the REI to support its self. I still work full time at a public job. I want to get 4 or 5 behind me and a couple more rentals before leaving my job.
Do I start looking for another one?
My fear is that I will find another rehab and still be tied down due to waiting for the sell of the one I have. Then I will have to wait before I can purchase the new rehab. Thus, causing me to tie up another person with my problem.
What does people in my situation do?
Any help or comments please reply.
Thanks,
Marty
Regardless of Rehab, New Construction etc......if you wait until one is finished or sold before starting another one........you will be working at your current job the rest of your life.
Start another project is my vote....as long as the numbers look good there should not be a problem with starting another one.
NC_Yank
I started out doing what you did. I got a rehab May 2003 as my first property. I was so excited and worked on it every day for about 4 months until it was done. Long story short here I spent too much money and bought too expensive and lost about $25k.
Now not that this will happen here but guess how long I was looking for my first property---about 6 months. Guess how long it took me to buy another house after I got the 1st sold....6 more months!
Now on that 2nd house I got smarter and didn't do much work on it myself. I hired out a lot of work and stil kept my eyes on the market.
Now that was June 04...Its now November 18 and I've purchased 3 more houses, sold 2, working on 1, and set to close on my next one here in a week or two.
Sure you can make a lot more doing the work yourself and concentrating one property at a time but the money is in the volume. You never know when someone will need you to buy their house!
I'm in the same situation. Finished 1st rehab in Oct. Listed it myself for a month, No luck. Have it with a reltor now at the worst time of the year. Can't start another until the 1st sells. Tough. Hoping to do a few and make enough so I can buy another as the current project is winding down. Anyone have other ideas/approaches to this?
do what your pocket will let you do. do what you are comfortable with. just don't over extend money wise. if can financally do two, three, four, five at a time do it. if moving to fast is going drive you broke don't. for me its better to have a captial base so i don't have to worry about banks and running to keep up with the interest. it takes the pressure off.........km
frogger, Ken, all --
Maybe you can share how you juggle the finance/money aspect of the deals.
Use credit cards? helocs?
structure purchase creatively? other funds?
How long are some houses sitting vacant before/during/after rehab? Any specifics to make things work? ~thanks~
Marty et al.
One strategy which helps to turn properties more quickly is to work with a note buying group that has a program specifically for rehabs retailing their properties (not all buyers do), where as long as you can provide photos, appraisals, repair lists, and in some cases repair costs, you can offer as little as 5% down, and seller finance the balance.
At closing, through a simultaneous close, you carry the note back, but not PAST closing, and you then sell/assign that note for a cash lump sum at the most minimal discount possible, cashing you out.
This way, you get the best that seller financing can offer, which is more interest in your property, and an enlarged buyer pool, while you get the best of a conventional type deal, where you get cashed out when you walk away from closing, and get your money and profit back out of the property as quickly as possible to minimize holding costs, without engaging in price reductions. You charge full appraised value for the property, because you are offering seller financing with so little down (in some cases zero down).
Hope this helps, Dave
The method I mentioned is also a great way to focus on volume while controlling the exit strategy, and creating a system, which all entrepreneurs will say is the way to true wealth, because it removes YOU, as a person, from the equation...meaning that eventually, if you are not already, you can run the rehabs instead of doing them yourself, because you have steps A-Z outlined, and you can ultimately hand those responsibilities over to a manager, while you get to go golfing as the system brings in the profits.
Now granted with rehabbing, it takes substantial time to build a business of that magnitude, but rehabbing is a business like any other, if you treat it like one, like any other.
Obviously whatever ANY rehabber's business model is, since it is their business, it is up to them to decide and feel comfortable with it. And for those who want to do volume, where the money is, the program I mentioned is absolutely one way to achieve that goal.
Very best regards, Dave