How do you pay full price and make money..... - Posted by David Krulac

Posted by Redline on April 17, 2003 at 09:01:55:

Well actually I did buy a house here for $10k but it’s an exception rather than the rule. It was inner city (not war zone) and needed about $40k in repair. ARV about $110.

I just have to laugh when I see people buying lots of houses for $5-15k. I’m in Bergen county NJ 15 mins outside Manhattan.

RL

How do you pay full price and make money… - Posted by David Krulac

Posted by David Krulac on April 13, 2003 at 18:10:48:

A common misconception is that if you pay full price, you can’t make any money. While there is some logic to that statement, its not necessarily true.

  1. buy at full price sell at more than full price on terms, making money on the price spread as well as the interest rate spread.

  2. convert the property to another use. Like convert a SFH into a duplex, or convert a farm into a housing subdivision. You buy at full price and convert it to a higher use that is worth more. You need other conditions like proper zoning that allows the conversion or a variance from the zoning that does not permit the higher use.

  3. In a rapidly appreciating cycle, there is the possibility of buying at full price and selling to somebody else at a higher price. Maybe by having them take over your contract through an assignment.

  4. Buy and Hold. David Schumacher in his book by the same name makes the point that even if you pay more than a property is worth if you keep the property for the long term like 20 years. You can read my review of his book and 38 others on Amazon.com The address is:

http://www.amazon.com/exec/obidos/tg/cm/member-reviews/-/ATWNZ13YA54NJ/1/ref=cm_cr_auth/102-0499500-1021766

Here’s Another One - Posted by phil fernandez

Posted by phil fernandez on April 13, 2003 at 18:56:14:

Buy a house with a large lot that can be subdivided off. Sell the house for what you initially paid for it and then sell the seperate lot. The price for the seperate lot is your profit on a deal that you paid full price.

Re: How do you pay full price and make money… - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on April 13, 2003 at 18:49:09:

David Krulac–¶-----------------

Thank you for your post. I think you make an important point. And I think it is good to point out some of the circumstances whereby one makes a profit anyway.

“Full price” means, in my mind, the asking price.
Here is at least one more: The asking price is less than the market value and so it can be sold for a profit right away.

Good Investing and Good EducatingRon Starr**

Re: Here’s Another One - Posted by GL - ON

Posted by GL - ON on April 14, 2003 at 10:05:25:

Here is a variation on your idea: Buy 2 or more houses on one lot, and find out they are already separated. In other words the seller sold as one parcel, even though he could have sold for a lot more by selling one by one. No dividing required.

I have seen this more than once. You have to go down to the courthouse and do some research to find it out. I think that is why the owners did not realise what they had.

that’s a great one… - Posted by David Krulac

Posted by David Krulac on April 13, 2003 at 21:16:27:

Thanks Phil, done that one myself too.

This is my single favorite - Posted by JT-IN

Posted by JT-IN on April 13, 2003 at 19:54:31:

Phil:

I have done this a number of times, and it is just like “found money”. I love this one better than any other single approach in the business… especially when the seller had no idea what they were sitting on.

JT

Poor realtor skills… - Posted by Hal Roark

Posted by Hal Roark on April 14, 2003 at 08:14:06:

Every year, I pick up a couple properties in which the realtor has inappropriately listed the thing. Usually, I end up paying more than the list, and still make lots of moolah.

Case in point: bought a sfr a few months back for 20k. Was listed for $15,900, I put 20k into it, and it’s worth 80k now. I’ll pay above list all day, as long as it’s below fmv :slight_smile:

Hal

thanks,… - Posted by David Krulac

Posted by David Krulac on April 13, 2003 at 21:21:08:

and in a rapidly appreciating market asking prices sometimes haven’t caught up with the market. A property will be for sale at last years price or 6 month ago price and todays price is much higher.

People often complain in an escalting market that bargains can’t be found. However buying when prices are rising CAN be more profitable than buying when prices are stagnating or declining. So while it is commonly referred to as a seller’s market, there are opportunities for the discriminating buyer.

David Krulac
Central Pennsylvania

Re: This is my single favorite , even in so. ca - Posted by wade

Posted by wade on April 13, 2003 at 21:39:12:

My favorite even in southern california. The twist? Appraisal came in 100k under buy price! Do you dare? I still went for it , another dropped out . Now it is split and well worth it!!! There is a deal somewhere ; every day; every marketplace , keep searching!

Re: Poor realtor skills… - Posted by Steve (Atl)

Posted by Steve (Atl) on April 14, 2003 at 09:26:24:

I will put in my bid at $20,001.

Just kidding. Sounds like deals that would be very tempting to do and very hard to pass up.

Just dont be caught with the potato! :slight_smile: - Posted by Brad (CA)

Posted by Brad (CA) on April 14, 2003 at 12:05:42:

A guy here in San Diego told me that he’s been suprised about how well some inexperienced people have been doing over the last couple years. The reason is the rapidly escalating market here. He called it the “Bigger Fool Game”. Buy high, sell higher tomorrow. Must work, but sounds dangerous.

What do you think?
Brad

Actually… - Posted by Hal

Posted by Hal on April 14, 2003 at 16:52:59:

I bid $17,500 with 5k earnest money and no inspections. The realtor told me they had another offer at 20k, but the bank liked mine better, and if I would go up to 20k, they would take my offer. Of course, realtors never do this in the real world… especially, as in this case, when they are getting the full 6% commission on the deal. Nonetheless, strange things have been known to happen.

I knew this would go higher than the asking price, which is why I bid above. Real nice house. Real nice area. A definate keeper!

Hal

Dammmm … - Posted by Redline

Posted by Redline on April 15, 2003 at 23:26:11:

I still can’t grasp the concept of buying a HOUSE for $20k. This is used car money! :wink:

RL

Re: Dammmm … - Posted by js-Indianapolis

Posted by js-Indianapolis on April 17, 2003 at 06:56:46:

I just bought one for $8K. Fully furnished too. Skylight on top of that.

I should mention the skylight was from a fire, the furniture was junk, and it needed a healthy amount of snow removal…from the inside.

Sold via double close for $19K. After what I estimate about $75K in rehab, the guy should get about $135K out of her. Not a bad deal for all involved. The best part was the title company had to account for my $1 in earnest money. Although I’m still upset I had to put money down.

NO MONEY DOWN IS BOGUS! I suppose I could look at it as an 1,100,000% return on investment.

Oh well, onto the next one. It’s much nicer, and therefore $22,500. I’m moving up to the big leagues now. Woo HOO! This one is sold for $30K, so only have $7500 profit. I’m doing it RIGHT this time, with no earnest $$. But wait, that would be an undefined return. Hmmm…maybe I’ll offer a penny, to increase my return. Man, this business is so confusing.

I’ll post a picture if… - Posted by Hal Roark

Posted by Hal Roark on April 16, 2003 at 10:02:57:

someone can help me figure out a place to get free photos posted. Any ideas? I used to use some Microsoft site, but I’ve forgotten the url. I’m open to any suggestions.

Hal

PS. Redline: just go sell another course! LMAO.