Posted by jasonrei on November 12, 2003 at 16:47:56:
We had jobs when we started, but we couldn’t have jobs and do the deals wew ere doing. We work much longer hours now, and we have taken on a lot of debt, but the income is good and the potential is tremendous.
And the best part is every day we are less horrible at it than we were the day before.
Would you ever live in your rehabs? - Posted by Curiousguy
Posted by Curiousguy on November 12, 2003 at 02:35:39:
Ok, so after you fix it up someone buys your rehab
because it’s theoretically the best looking one on the block.
Honestly though,
YOU, Yourself, and your innerself, (out of all people)
know how it looked BEFORE you made the repairs.
You remember how ugly and dirty it looked…
you recall the smell, the stench,
the trash, the stains, and the mold, dirt,
You are the one who really knows what happened to that property before, even though others may not.
Perhaps a fire or a flood, backed up sewer
or a replaced lead pipe,
maybe fallen tree on the roof or a foundation problem…
Roach, rat problems…
worst yet, perhaps a serial killer lived there for a long time?
Knowing all this, would you really ever consider moving in to any of your rehabs or would you honestly just choose to live somewhere more fancy and luxurious, given all the money you’ve made from your REI?
I have to answer this one - Posted by Lance-M
Posted by Lance-M on November 13, 2003 at 02:05:13:
we are living in a “rehab”. Its really more of a luxury conversion of a 1983 oak and brass nightmare that hadn’t had any work done (original carpet, fixtures, mold etc). The first night we started smashing the kitchen with a hammer. This was directly after we had to give up buying our super luxury dream house, brand new. That was JULY 2002 and we are still working! hehe. well we are also getting college degrees and doing everything ourselves (my fiance and I). this includes building all the maple kitchen cabinets and bath vanities in the garage from raw stock. we are putting in a frameless shower and jacuzzi, we put in cherry floors, all new kitchen appliances, quartz counters, every single thing down to the light switches and doorknobs was replaced. It has been an adventure but we got to design and build something from scratch all by ourselves with no outside contractors which not many people do. Believe it or not the quality of a lot of the things is much better than in our new 440k house we previously lived in. The entire thing probably hasn’t cost 30k so far and everything in the house is new. anybody who really wants to see what living in a remodel zone looks like photos at http://photos.yahoo.com/ticess@sbcglobal.net. Originally we wanted to sell it to get our equity out but we are overspending and we are thinking of just staying for a while while we do a few more houses. I’ll never be as happy as living in something I have designed from the ground up but it is not the same house anymore. I like to move every 2 or 3 yrs but this house has kind of grown on me.
Re: I am - Posted by DavidV
Posted by DavidV on November 13, 2003 at 24:47:37:
I’ll never forget, my dad walked through my house right after i bought it and said “son, i know exactly what this place needs…a match”. But after gutting a few rooms, all new kitchen, flooring, doors, windows and heat and air…whaaala. Doesn’t bother me in the least. In fact i kept the before pics, it makes for a good laugh at times.
A side benefit is the built in equity and the 2 year tax free thing. You could “house hop” every 2 years selling tax free and keep rolling it over. Do this several times and you could have a paid for house.
some more questions - Posted by Curiousguy
Posted by Curiousguy on November 12, 2003 at 12:53:33:
Thanks for all your posts.
i guess the lesson here is to fix it to a point where you wouldn’t mind living there either.
some more questions.
Do you typically list your rehabs right away with an agent or FSBO? At a discount or top-dollar? like 5%~10% below/abo market?
what % commission do you pay the agents?
Do you show proof / disclosure that you’ve fixed everything when you sign a contract?
Where I live, the law says that sellers don’t have to disclose anything if it’s fixed up already and no longer a problem.
Yes, absolutely. - Posted by Sean
Posted by Sean on November 12, 2003 at 11:58:59:
In fact I’d rather move into the house I had fixed up because I know exactly the quality of repair, rather than one someone else just fixed up.
Re: Would you ever live in your rehabs? - Posted by jasonrei
Posted by jasonrei on November 12, 2003 at 09:07:34:
I live in a house I fixed up 1 1/2 yrs ago. Wasn’t really a “rehab” though. No structural problems. No major problems, period.
I would PREFER to live in one of my real rehabs. I did one that used to be a brothel/liquor house. If those walls could talk…
If it was closer to the area I work in I would live there now. It had a huge jacuzzi in the ground; you can only imagine what probably went on in that thing. I had it dug out and moved into my backyard. Flushed it out, cleaned and refinished it, and now it’s beautiful.
So, yes, I would have no problem settling into a rehab.
Re: Would you ever live in your rehabs? - Posted by Marcos
Posted by Marcos on November 12, 2003 at 08:55:14:
I have as well. I’ve done it twice already. And have almost doubled my investment both times, plus took the money tax-free.
I agree with both these gentlemen, it’s a great idea.
Marcos
Have and would - Posted by ken in sc
Posted by ken in sc on November 12, 2003 at 07:08:29:
I certaionly have. Buying a run down house is one of the easiest ways to buy below market, whether for resale of to live in. I purchased a run down house for 175K, put 40K in it, lived there 2 years, then sold for 275K and took the money tax free. We lived in a newly renovated house in a great area and made tax free money. It doesn’t get any better than that.
Re: Would you ever live in your rehabs? - Posted by Long Beach Ed
Posted by Long Beach Ed on November 12, 2003 at 04:28:23:
Curious,
Why wouldn’t I? Because the place was a dump at one time? Assuming the area is great, after renovation that place is cleaner than anything else on the block and I have gone through every inch of it. I know that house inside and out. I know the neighbors and the area.
I have renovated several places and have lived in some of them. The place I live in now with my family had a basement full of water when I bought it, a roof that leaked thousands of gallons with each rain and termites.
Today its worth far over a million dollars – ten times my purchase price. I suppose if I skeived dirt I could have let someone else fix it up and make the money.
Ed
Re: some more questions - Posted by Jack
Posted by Jack on November 12, 2003 at 14:35:15:
Listing commssion is 4-5% depending upon where the property is located. Listing price is 0-10% below market depending upon where the property is located. I only make mention of items which would either need to be disclosed, or new items which would be positive selling points (new furnace, new carpet, new roof, etc…)
Re: some more questions - Posted by jasonrei
Posted by jasonrei on November 12, 2003 at 13:23:47:
FSBO when repairs are in the last week, then maybe another week or two FSBO. Typically I list it on MLS about a week after it’s ready. I go for top dollar if the rehab turned out great (normal). Less than top dollar if I don’t particularly like how I let the house turn out. Nice house = probably 5% or more above what the avg nice house went for. Usually there’s a house that sold for higher recently, you know the guy that put in a super custom kitchen, nice deck in the back, etc. Still, I won’t list a house for more than I think it’ll appraise for. And there’s usually at least 1 or 2 houses in the neighborhood that are listed for higher than mine even though they are inferior.
I pay lister a flat $275 fee. I pay the buyer’s agent 3%, more if it’s a lower-end house.
I wouldn’t show the buyers proof of any repairs I’ve made. If their inspector points something out I’ll negotiate (maybe a higher price if I do the repair or “fix” something they swear is wrong). I leave the paperwork on the new appliances. I give them the foundation warranty and termite treatment paperwork, but I don’t guarantee anything. I fill out the Seller’s Disclosure honestly. Here in Texas I disclose things as far as I know. Don’t feel like there’s any need to hide anything. Truth is I don’t know the histories of most of my houses. If I see a problem I fix it. I go into the deal knowing what the problems are and if I find an unexpected problem I fix it and it comes out of my projected profit. Better to fix it right up front as a house sitting on the market for months is way worse than even a couple thousand bucks in unplanned repairs. Besides, it costs more to send a coupla guys back out to a house than to have em do it right the first time. This lesson was recently firmly planted in my head on a couple of houses that had aluminum wiring. If I would have installed the right twisters, outlets, and breakers right the first time I would have saved a few hundred bucks and would have gotten to sit on my butt this past Sunday the way I like. This is more than you’d asked for but oh well.
Of course - Posted by Jack
Posted by Jack on November 12, 2003 at 09:41:45:
I’ve done it at least five times. You’ve got ‘issues’.
Re: Have and would - Posted by Gregory
Posted by Gregory on November 12, 2003 at 09:06:32:
That’s not a bad idea. If you don’t mind moving every 2 years or so, this is not a bad way to get a tax-free return on your investment.
$275? - Posted by Curiousguy
Posted by Curiousguy on November 12, 2003 at 13:31:36:
Ha ha… thanks for the interesting story.
Is it normal for a listing agent to accept such a low commission fee? I suppose he/she agreed to it because they know you’d be bringing them a lot of deals to close.
Can I ask how many deals you do a year
and what part of the country are you located?
Re: $275? - Posted by jasonrei
Posted by jasonrei on November 12, 2003 at 14:15:29:
I was paying $350 to another guy, then he went up to $500. A friend of mine is a broker and I asked him if he’d do it for $275. He’s done about a dozen for me starting this last summer. I draw up the listing sheet, email the photos, and he inputs the info. I try not to bother him too much, and I try to submit 2 or 3 at a time so he can sit down for an hour and do it. Realize that I get NO service from him aside from the entry, and some agents are less inclined to deal with these listings. I try to send my agent at least 2 listings a month, plus he’s my agent on some of the deals I get from MLS. If I’m not buying off MLS I give my agent money for running comps for me.
I will probably get licensed in the next couple of months and list my own houses and run my own comps. Agents like dealing with other agents more than they like dealing with homeowners, and I can understand why.
I work with a partner and we do 1-5 rehabs a month. Last year was our first and we did 17. This year we’ll do about 35. Next year we better do at least 50 nice deals. We are full-time rehabbers in SE Texas.
wow that’s a lot of deals - Posted by Curiousguy
Posted by Curiousguy on November 12, 2003 at 14:44:36:
you don’t have fulltime job?
i would be impressed at your accomplishments so far.