Posted by Robin(AZ) on April 13, 2004 at 16:56:18:
Sorry, what confused me really was the math… the part where he created a note, discounted it, sold it to an investor…
Chalk it up to not enough sleep. After I re-read it, I realized he bought for $6500, not $65K… he bought and rehabbed outright, for cash, then sold on first and second position notes, then sold the first note at a discount to an investor, and kept the second position note.
I had a little catnap at my desk at lunch
Seems like I have some opportunity here, but I will have to do some thinking… I have only done Lonnie deals to date, and my ability to accurately determine the ARV and repair costs might not be sufficient-- not to mention, I’d need hard money, which I am not familiar with either.
I am thinking of getting a property under assignable contract with a 60-90 day period to close-- hey, they are abandoned, what’s the rush?-- contingent on inspection, of course. Maybe put an ad in the paper with address for drive bys… see if anyone bites. Like I said, I dont see may rehabbers down there, but it just takes one!
I read this article, about buying really trashed places in low income areas. I am working near an area with a lot of abandoned and seriously run down houses, mixed in with residences occupied by both tenants and owners, quite a few with pride of ownership. I NEVER see the the local rehabbers down there, and I am looking for a way to proceed.
Quite frankly, I am not getting this article. If anyone has worked this particular kind of deal, your response would be greatly appreciated. In the meantime, I am gong to read this article a few more times, it could just be I am too sleepy to get it!!
Re: Can someone explain this . . . - Posted by Phil (CO)
Posted by Phil (CO) on April 13, 2004 at 15:28:01:
I’m not quite sure what you’re confused about, but I can offer what may
be clarifications.
Buy house very cheap in run down area
Fix up to minimum standards, depending upon exit strategy.
Find buyer.
As was noted in the article, the key is to find a buyer.
I know a guy in the Chicago area who does this exact sort of thing. He
finds deals through one source - classified ad in small paper that is
local to the area he works in. He gets deals. He bought one place for
$5,000 cash, if you can believe that! He put about $20k worth of work
into it, refinanced, and is renting it out Section 8. The ARV of this
property is on the order of $50k. Great cash flow.
It’s a good way to make money if you are willing to work in those types
of neighborhoods with low income buyers. Also, don’t expect much
short term appreciation in these areas. Expect to make your money
through your financing/rent.
