Posted by John-Fl on July 31, 2004 at 16:58:12:
You are “assuming” that they paid “at least 50% of what they were owed on the property”. Why not go over and ask who the owner is and introduce yourself?
How are they making money? - Posted by eric
Posted by eric on July 31, 2004 at 13:42:03:
I am watching a company rehab a foreclosed house across the street from me, and I am amazed that they will make any money from this bldg.
The house was forclosed on for 49K, this company took possesion of it within days of the foreclosure. My assumption is at best they paid 50 cents on a dollar, or approx 29,000.00.
Since then they did a complete tear off and replace of the roof. Then they had to gut the entire kitchen including all appliances. They have had a crew of no less than 2-3 contractors working a minimum of 10 hr days, some days they have up to 5 there at a time. They are putting in 6 day work weeks for over four weeks now. I am not sure how many more weeks before they will finish up. I estimate atleast 900 man hours at an average of 10.00 pr hr.
29,000.00 price of house
3,500.00 roof (estimate)
9,000.00 labor(estimate)
5,000.00 materials
1,500.00 purchase closing costs.
48,000.00 total
From what I can see they will be lucky to sell this property for 55,000.00. I assume from what I have seen the houses sell for around me, that it will be closer to 50K.
This is what this company does, I just don’t comprehend how they are making any real money to make it worth it. They do owner finance these properties, so unless they are keeping the notes to full term. I unsure how they can be profiting.
Re: How are they making money? - Posted by jasonrei
Posted by jasonrei on August 02, 2004 at 10:03:52:
- Maybe they WON’T be making any money on it
- Maybe they paid far less than what you think
- Maybe they’re going to surprise you with the resale price
I’ve seen rehabbers (who’d had at least a few deals under their belts) buy a house for $30k, put $25k into it, and sell it for $50k.
Re: How are they making money? - Posted by Jack
Posted by Jack on July 31, 2004 at 22:59:25:
If your estimates of costs are correct they probably are not making any money off this job. It’s really hard to make money off rehabing a $55,000 house. Maybe it will be worth more than $55,000 when completed. Maybe your labor and material estimates are high (they sound about twice what I would estimate). It would be unusual for a Bank to sell an REO so soon for such a discount to market, but of course not impossible.
Re: How are they making money? - Posted by Bob Taylor
Posted by Bob Taylor on July 31, 2004 at 17:48:47:
Why does it matter to you? Is this a deal you turned down? There are ways to find out if it is so important.
Good luck, B T
Why do you assume they paid $29K? - Posted by BOB H
Posted by BOB H on July 31, 2004 at 14:44:21:
If your other numbers are close, I’ll bet they paid substantially
less. It should be fairly easy to find out the purchase price - call
the county assessor’s office or a title company.
Re: Why do you assume they paid $29K? - Posted by eric
Posted by eric on July 31, 2004 at 15:39:55:
I agree that this is the only way they could have done it. I did actually consider calling to find out.
I assume that they paid at least 50% of the forclosure amount, because no one else ever got a chance to bid on it. It came up that the property was going up for forclosure then in a matter of days they were already in there. It seems to me that any seller that took an offer that fast would have had to of gotten at least 50% of what they were owed on the property if not more.
I came home today to find a HVAC company in there now. Tack that on to the bill.