Here’s something you’ll never hear on The Today Show or the evening news. When is the last time you heard about a house selling in less than 3 days on the market.
It happens folks. If you just follow my simple formula for selling houses, which is:
Real Estate Investing Tip:
Pick a good homeowner neighborhood
Do a great rehab
List it for less than the other comps
Sometimes I lie awake at night thinking, “Maybe the economy is so horrible I can’t be a rehabber – not in this market,” and “Maybe I should stick to increasing my rental portfolio.”
Then I wake up from that nightmare, and slap some cold water in my face.
Look at this deal.
My student; Leesa McShanes (name changed to protect those phobic of all things public) took my advice and went to a recent auction. She picked up 846 Mangold Street in PigTown, MD, now called Washington Village by all the Yuppies moving in.
Here are the numbers:
$102,300 Purchase Price
$ 11,000 Rehab
$180,500 Under Contract NOW!!!
Profit Potential: ~ $35,000. Not bad for less than a month of work. God, I love this business.
We completed the entire rehab in a weekend which consisted of adding crown molding and trim, new paint throughout, some patch work, some repairs to the roof and rooftop deck, a couple of new vanities – and finally we switched out the main water line that runs from the main meter in the street into the house. New carpet was added on a Monday and the staging company came in on a Tuesday.
Leesa put the property on the market on a Thursday evening, and by Sunday or Monday she had a cash buyer for the full-asking price less 6%. We raised the price 3% and gave the six – for a net seller help of 3% – which we always figure in our purchase price before buying.
Leesa has owned this property for less than a month! She hasn’t even made her first payment to the bank yet!
I wish I could say they are all this easy, but of course we know they are not. What we do know however, is – the property was priced right at about $15,000 below others in the neighborhood. This tactic works folks! Buyers today want VALUE but they also do not want to sacrifice quality. Follow the success formula above for investing in real estate, and you will win every time.
Check out a little video action:
Love to hear your comments!
Look at the final pictures below:
The deals are coming fast and furious now. There are deals-a-plenty out there folks, so get off the fence, find a rehab to flip, get some good education, work your numbers, and invest in real estate. There will NEVER be a better time.
This is a story about my coaching student; Russell Sanders. Russell is a full-time employee of the federal government. He was tired of losing money doing RE deals, then he decided to join forces with me. Russ found this deal on the MLS – and we think it will be a doosey.
This house in Capital Heights, MD was vacant and bank-owned. The numbers are as follows:
Honestly, when I first saw this house, I thought – “heavy cosmetic.” I mean it really was not that bad – but it needed expensive items, like new windows, 2 new baths, a new kitchen, new doors, a new front entrance, new carpet, some new plumbing and updated electric. But seriously, its an easy rehab. I mean, easy in the sense that we won’t be gutting the place all the way back to the studs – which is refreshing for a change.
We’re about 3 weeks into the rehab and we’re seeing some serious progress. I have some great video (but I’m biased) of the progress we’ve made thus far. Man, I’m starting to love this technology stuff!
The basement here at Gunther is below grade, of course. While adding the new full-bath, I noticed a big old pipe next to the drain for the toilet, and was wondering what the heck it was. I got a lesson on plumbing that I thought I’d share with you. If you don’t like poop floating in your pretty finished basement you must see this extra-special REI video tip. In the second 1/2 of the video, I talk about how to properly remove a column in the basement. Check out what I learned!
The Ugly Duckling is Turning Into A Swan
Feel free to leave comments below!
Here’s the second installment of PJ’s mondo-Baltimore City rehab. At just under a few weeks into the rehab you can see we have the place gutted, and framed. You’ll also notice that we waterproofed the basement which as I understand, Baltimore City is requiring for all new rehabs whose scope includes a full-finished basement.
REAL ESTATE INVESTING TIP: Beware, if you plan to gut a house and finish the basement in Baltimore City, you may be required to waterproof. Listen, waterproofing is a plumbing job. A lot of plumbers don’t like to do it however, because its dirty grunt work. You have to bust up the concrete slab, and excavate a trench of about 7 inches wide and 12 or so inches deep. That my friends makes a BIG PILE of mess. Once that’s complete, the job is pretty simple. The plumber will drop in a plastic corrugated pipe and you route that to a sump pump. Cover it all over with some gravel, then fresh cement and viola’ your done. Seriously, the costs of the material for a job like this is less than $300-bucks. But the labor is ROUGH! That’s why we have a $10/hour guy break up the floor and haul the debris. Then once the plumber is done, we bring the $10 guy back to cover up the plumber’s work.
Check out the video.
At this point we are post-demo, and we’re well into framing. We’ve pretty much busted out most of the interior walls, added new support beams, and we’ve busted up two bedrooms and made them into one grand master bedroom complete with its own master bath. We also took away from the over-sized landing at the top of the steps to add space to the otherwise tiny main bath. We framed in a pantry, a 1/2 bath, and a laundry room on the main level just beyond the kitchen, and we added some nice arched entrances into the living room and dining area. The kitchen is immense and will have a sit-at breakfast bar for three to four – in addition to an adjacent dining room. The house is really starting to take on a much more modern and open layout.
Click on the picture below for more pics of our progress. Enjoy
C’mon! Bring it on! I’ve got to hear your comments on this one. My student Joann is psyched. I’m psyched – our banker is foaming at the mouth, our contractor wet himself – we’re just damn giddy over 5204 Wesley Ave. The results are beyond our wildest dreams. Now pray to the RE gods for a buyer with credit.
Talk about a trash-formation, uh….transformation! This complete-gut rehab turned out so much better than I could have dreamed. There are plenty of pictures below, but lemme’ tell ya – they simply do no justice to being there in person. The place is truly amazing.
My student Joann has turned out to be a complete pro. From picking the colors and the finishes, to design ideas, to working the contractors – I think she’s a natural. RE investing is not for everyone. Some people are naturals, some learn to be great, and some just can’t stomach the pressure and the roller-coaster. Joann is a pro.
This was an $80,000 rehab that was completed on time and on budget. In fact, our contractor completed the job in just at 3 months.
Click Here for the 1st installment of the story
So what did we get for our 80-large? How about all new EVERYTHING! Starting with six 30 yard dumpsters of trash and debris, a new porch, new roof, new and larger dormer, new framing, new windows, insulation, new plumbing, electric and HVAC. The entire house was sheetrocked, and a bathroom was added to make two full baths. We increased the ceiling height of the 2 second
story dormer rooms, and we pushed back the walls to give them a bigger feel. We added a sweet kitchen, 2 new stairways, all new lighting, and we tightened up the landscaping by adding a few beds, new sidewalks, and grass seed.
Gee’s 80-grand adds up fast huh?
Look at the place! Its an insane change, is it not?
Its now on the market at a very fair price of $204,000. (UPDATE – $199,900) If a potential buyer walks into this house, and they have a budget of 200K, I have no doubt they will fall in love.
THE SUCCESS FORMULA
Your challenge in this market and the secret to success is as follows: You MUST create OVERWHELMING VALUE. Average is no longer acceptable – not in this market. The MLS is littered with average listings.
First you have to first find deals in areas where people want to live. There are many places in the City where homeowner’s are no longer buying. I’m telling my students to stay away from anything that ends in Park or Hill – i.e Federal Hill, Reservoir Hill, Patterson Park – etc. Those places are not hot! They’re played out!
Second, you must buy your deals right! If you’re not buying at 60% or less on the dollar (minus repairs) – you’re paying too much and you’re setting yourself up for sure failure. Be patient. Great deals are out there!
Third, you have to do a rehab on a budget that will allow you to sell the house for LESS than the comps in the neighborhood. That’s right! Not only do you have to make the house super-sweet, then you have to turn it around and sell it for less than the others in the neighborhood.
Its fun being an RE Investor, huh? Sure – its just like “Flip This House!”
Click on the tasty toilet below for all the juicy “AFTER” Pics!