Where Are The Really Good Real Estate Investment Deals

Where Are The Really Good Real Estate Investment Deals

Where Are the​ Really Good Real Estate Investment Deals?
In writing my last article about the​ neighborhoods where I​ find the​ most profitable rehab real estate investment deals, something occurred to​ me .​

In that article I​ described investing from what I've found is​ typical in​ doing this business .​
I​ wrote about where I​ TYPICALLY find the​ deals .​
Well, what is​ typical in​ this business?
No two deals are the​ same, that's for​ sure! Every rehab itself is​ different with different problems to​ solve .​
So, in​ describing a​ typical deal, I'm referring to​ the​ spread involved .​
the​ spread is​ the​ different between what I​ can buy the​ house for, and​ what it's value will be when it's brought back up to​ standards .​

The next big question is, What will the​ rehab going to​ cost.
For instance, if​ a​ property in​ my market has a​ $25,000 spread between what I​ can buy it​ for​ and​ what I​ can sell it​ for​ (the as-repaired appraised value), it's a​ maybe in​ my book depending on how much rehab it​ needs .​
if​ it​ needs much, I​ would probably pass unless some external factor makes it​ a​ good buy, like the​ neighborhood .​
In other words, if​ it​ needs much rehab, I'd have to​ be convinced enough to​ put some of​ my own money into it.
I typically look for​ houses with a​ $30,000 spread or​ better .​
You have to​ decide for​ yourself, based on values in​ your area and​ what is​ the​ minimum you want to​ make, what spread you'll be happy with .​

So, what is​ a​ rehab real estate investor's homerun?
Homeruns occur at​ the​ outer edge of​ what is​ typical .​
My homerun deals have occurred one of​ several ways .​

- the​ spread is​ stellar .​
Let's say the​ spread is​ $45,000 and​ the​ rehab is​ a​ manageable $5-10,000 .​

- the​ spread is​ good, but the​ rehab is​ very light .​
Wham-bam, I'm looking for​ tenants within days of​ closing.
- the​ cost is​ exceptionally low for​ a​ given area .​
Sometimes the​ spread on paper will not be anything to​ get excited about, but the​ property has a​ huge lot, extra bedrooms, or​ is​ located an​ area that is​ in​ serious demand.
- There is​ NO rehab, and​ the​ spread is​ sufficient that I​ can buy it​ with none of​ my own money.
True story - I've only had one NO rehab deal .​
Wow .​
This house had been recently rehabbed, clean and​ didn't need a​ thing! This was a​ homerun just due to​ the​ ease at​ which I​ added this property to​ my inventory! the​ spread wasn't great, in​ fact, I​ had a​ local hard money lender make up a​ story about being out of​ money because he thought the​ spread was too narrow and​ didn't want to​ lend on it .​
He wrongly assumed there was a​ significant rehab .​
(Being straight up with me was too hard, I​ guess.) I​ consider this a​ homerun because I​ bought this property, changed the​ locks, put out a​ sign and​ had it​ rented within two weeks .​
Mind you this is​ a​ beautiful well-built brick/block home in​ a​ great neighborhood .​
Cost to​ me…nothing .​
This house has one of​ my best cash flows month-to-month.
The point here is​ to​ give you an​ idea of​ what kinds of​ homeruns rehab real estate investors look for​ .​
But, here is​ a​ key point…
It's truly NOT worth my time, or​ yours, to​ wait around for​ the​ homeruns .​
I​ firmly believe that these kinds of​ homerun deals come about by being an​ active investor .​
Rehabbers that keep 1-2 projects going at​ all times, get calls from wholesaler with great deals .​
Personally, I​ make the​ best buying decisions decisions with what I​ have among the​ properties brought to​ me when I​ am in​ my buy mode .​
Some of​ these turn out to​ be homeruns, some don't .​

If I​ waited around for​ only the​ homeruns:
- I​ would waste precious learning time .​
Since there is​ no substitute for​ experience, I​ want all I​ can get!
- I​ would lose money over the​ long run as​ a​ buy-and-hold investor .​
if​ I'm buying and​ rehabbing with little or​ none of​ my own money anyway, it​ doesn't make sense to​ wait around for​ homeruns if​ I​ can add properties to​ my inventory that fits my investment criteria .​
If you're in​ the​ buy and​ hold business, the​ important thing is​ how much property can be controlled with as​ little money as​ possible .​

Question: is​ it​ better to​ have $1,000,000 worth of​ property appreciating or​ $200,000?
Hitting a​ homerun in​ rehab real estate, and​ anything else, requires these two ingredients:
- You've GOT to​ be in​ the​ game .​
By this I​ mean you have to​ have prepared in​ advance for​ your turn at​ bat .​
In the​ rehab business, this means you have enough knowledge to​ get started, you have a​ decided investment criteria, you have your money source lined up, and​ you are looking for​ property.
- You are swinging .​
In the​ rehab business, this mean you are buying property, rehabbing, learning and​ turning .​
It's not enough to​ merely stay on the​ sidelines .​

Let me say that again…

Where Are The Really Good Real Estate Investment Deals

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