Posted by Jimmy on March 29, 2007 at 06:50:44:
rehab and flip. a good business that can work almost anywhere. I am a rehabber, but I keep all of mine. Here are a few of the ways that I have found properties:
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newspaper ads. every morning, I read the online real estate sections of about 9 local papers in my little corner of East TX. by far the best single source of leads and deals.
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referrals from my “people.” My people are my managers, tradepeople, housing officers, etc. All of them know what I do and what I want. and they find me stuff. these people are in the streets everyday, and know the neighborhoods. my crew guys know they will get to do the rehab work, which is all the incentive they need. every 3-4 months, I put a call into the housing directors at the agencies from whom I have Section 8 tenants. I chit chat with them, and always ask them if they have any landlords wanting to get out. Those little phone calls have brought me several good deals.
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Once in a blue moon, I will find a listed property that works. I like doing major rehabs, and these are not often listed. Realtors don’t like to mess with majors, because they are hard to sell.
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HUD/USDA properties. I’ve bid on 20 or so over the years, and only got 1. but it is a good one. I still pay attention, but I don’t invest a lot of tiem and energy into this one. owner-occupants get the first crack at these, which is why I rarely connect. the one deal I did get was a 4-plex. I do pay attention to multi-family props that come up with HUD/USDA.
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Shoe Leather Approach. I have 2 properties that I found the old fashioned way. I drove by. one had a hand-painted FSBO sign. the other was different. I saw a fat, sweatty dude hauling drywall into a duplex. I stopped and asked him about the prop. he was the owner, and was doing the work himself. 5 minutes later, I had a deal.
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CAVEAT. as you may already know, your two biggest risks with rehabs are (a) underestimating the rehab budget, and/or (b) overestimating the ARV. as your expeeience grows, you will get really good at this. but even veterans can get stung. I have a beautiful house worth $65,000, and I have $62,000 in it. a big mistake. not fatal, but a mistake. My sin was not having better control of my rehab crew. They had just completed a wonderful project, and I turned them loose without making them bid out the job. my mistake.