Posted by Del-Ohio on January 09, 2004 at 21:12:59:
Are we getting good deals? Decent ones, I will give you a few exaples and you decide, some people do better some not as good.
Our target is a minimum of 20,000 profit per property if it is under 100,000 purchase and rehab costs. For a $200,000 property we want at least 40,000.
We made less on a couple lower valued properties that needed only minor repairs.
Example 1. Minor rehab to a mobile home with city lot , purchased for 15,000 + 3,000 in rehab, sold for 29,000.
Example 2. A modular located beside our six-plex, bought for 51,000 spend about 1,000-1,5000 in paint for the deck and some mulch, sold it for 65,000. Signed a contract on it the first day in the paper.
These are the only two we made less than 20,000, but they needed minor repairs and were rather inexpensive to start with.
The first building that we purchased was a five-plex, four residential and one barber in a small town. One unit was vacant and one was under eviction, we paid 55,000 spend about 10,000 upgrading it right away. We spend another 5,000 over the past year as we replaced tenants. The tenants pay their own utilities except water and sewer.
Gross Rents per month 425+395+365+295+85 = $1,565 Morgtage payments = $411 month.
We financed 100% of purchase price, plus 10,000 of repairs for 20 years. We were going to sell this one after renovations, but as we looked at the cash flow and then had it appraised, we decided this is a keeper, we will use the equity for down payments on other properties.
The largest project to date, also purchased through mls, is a 15 unit apartment complex with 12,500 square feet of retail space on the first floor. The building was empty when we bought it, after renovations it appraised for just a little less than twice the purchase/renovation price.
There is no “typicial” deal for us. We have purchased a Jehovah Witness church, an old historic house, an old hotel that we are renovating for commercial retail and apartments, a few single family houses that needed a lot of rehab, a few multi units (1-duplex, 1 fiveplex, 1 sixplex) a log cabin etc. we look for distressed sellers/properties or properties where we can increase their value.
If we like the properties we crunch the numbers and decide what we want to pay then we make offers that work for us.
The person writing the most offers buying th most properties is a quote I got from Robert Shemin. It may not always hold true, but you will ONLY buy properties if you make offers.
In the beginning we got one house for every 10-15 offers, today its more like one out of three. The more offers you make the more you learn, the better you get at making offers that get accepted.
My Viewpoint
Del-Ohio