Posted by Rich-CA on November 17, 2007 at 19:21:13:
You really need to read some books on the subject and watch a show called Property Ladder which often highlights the issues and pitfalls of what you are talking about. I have also found TLC’s “Flip That House”, not to be confused with the dreadful A&E program “Flip This House”, to be helpful.
I would read the “Unofficial Guide to Real Estate Investing” and get down to the library for books on “Flipping”.
Real Estate Investing - Posted by Suresh Sikharam
Posted by Suresh Sikharam on November 17, 2007 at 12:22:45:
Hello All,
I am interested in real estate investment. My idea is to buy run-down property and rebuild it to standards and sell. I have never done anything like this before but want to explore it. How easy/tough is this? What should one have to be successful in this sort of business?
Thanks
Suresh
Lots to Know - Posted by Jimmy
Posted by Jimmy on November 18, 2007 at 10:15:27:
buy-rehab-flip for profit. sounds easy. its not. lots of ways to &^%$# up. experience is the only way to really get a grip on this biz. there’s no book or course that can teach you all the required skills.
there are two pieces of information you MUST have before you can make an intelligent bid on a rehab project: (a) the ARV–the resale value of the property once you restore it, and (b) your rehab budget–what it will cost to restore the property. once you have reliable numbers in your possession, you work backwards to determine your maximum price. many of us have different opinions on how much profit is required. for me, its not really a formula. the more work I have to do, the more profit I require. If my house will be worth 65K when I finish, and I need to put 30K in it to get it there, I won’t pay more than 10-12K. but if that 65K house will cost me 5K to get there, I might go as high as 42-43K.
all of this assumes you have reliable numbers. determining ARV is easier. have a realtor pull comps. once you know your neighborhoods pretty well, you can figure comps yourself.
determining the rehab budget is tricky, and had KILLED many otherwise profitable deals. this is where experience is critical. I have 3 contractors who do my jobs. they know what I want. and they can accurately bid out the work. and when they do, they are working on a firm bid basis. if they miss something, it comes out of their hide, not mine. but one problem newbies will have is articulating to the contractor precisely what the end product needs to look like. again, this comes from experience, not books or courses.