Student Rehab Story – More Good News
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:
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Fantastic deal!I was a little confused with:” 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.”That’s 6% to the Realtor reduced to something else? By the way I am a Steve Cook student kinda like you were and I could not find this concept anywhere in his material.I know you have a lot more experiance than me so this maybe a redundant question.Still what a great deal.Back in 2007 it took me all year to make less than what was made on this deal in 30 days.
Spencer – Thanks for your comments. Let me try to clarify.
The 6% I’m referring to is “Seller Help,” and has nothing to do with Realtor commission. Its just a coincidence that Realtor’s commissions are usually 6% in this market.
Buyers, in this market, in almost every instance ask the Seller for closing assistance, and in most cases, they ask for anywhere between 3-6% of purchase price. So, if the purchase price is $200,000 and the Buyer requests 6% – they are asking the Seller for a $12,000 concession. The Seller’s net would be $188,000 before Realtor fees, etc…
In the case of my student, the Buyer asked for 6% Seller Help. We knew that the house would appraise for much more than the asking price. We also knew that the buyer really wanted the house. So we countered their offer by raising the asking price 3%, while still giving them 6%. So we’re really only giving up 3% total, right? Using the example above, we would have raised the asking price to $206,000 and would have given $12,000 (6%) – but our net would have been $194,000 (before Realtor commissions and other transfer fees)
Does this make sense?
Craig,
Do you still do coaching these days?
Greg
Yes, Greg – I do. Sorry for the delay in my reply I’m looking right now for two more students, then I have to seriously think about closing my doors for enrollment.
BTW – the deals you see on my site are RECENT deals done by my coaching students.