The other 1/2 of rehabs

[Baloo]

I am fully confidant in my ability to rehab a house.  Most work I can do myself and I have a great team for the things I can't or wont do.  But I am not so confident in my ability tolocate and purchase the home.

So far I have been looking at pre foreclosures and reo's as it would seem to me that they would offer the greatest potential equity.  I am looking at a number of properties right now and looking to start making offers begining of next week.

My question is for those of you who have been rehabbing for some time now.  Am I neglecting other possible markets by focusing only on pre foreclosures and reo's?  Have you found success from sellers that do not fit with in those two groups?  If so how have you gone about recognising such possibilities and potential?

Thank you for any input.

Eric

[tedjr]

Howdy Baloo:

Other possibilities include posting Bandit signs, ads in the local paper, vacant houses, FSBO signs and even the MLS and a commercial MLS such as Loopnet.com. You are probably hitting the two best sources but keep your ears to the ground with as many sources as possible every day all day long. There are also services that sell leads that may do some good like webuyhousesforcash.com  and fasthomeoffers.com to name a few. The owner of this site also offers a great service at quickoffers.com

[Baloo]

Wow, all that can launch a guy into a case of ADHD.

Do you do strictly rehabs Tedjr?

I have seen posts from people that do all kinds of re investing and those that do only landlording and wholesaleing, but I haven't seen to many say that they only to rehabing.  Is that a skewd perception or do most investors stay away from rehabing altogether.

Maybe its my previously mentioned attention deficit, but I can't think of anything I would rather do then buy a house for 100k, work 10k into rehabing it with my own 2 hands, and selling it for 150K.  Is that a feasable goalin todays market?  (Im in Michigan)

Thanks

[amusedtwinkle]

I would look for more of a margin, that is pretty tight margins you are looking at.  Purchase for 100K, put in 10K sell for 150K, you probably would come out with 25-30K when it's all said and done, due to unexpected expensed.

[thndrlight]

Hey Baloo,

I am in Michigan as well, and am doing my first rehab. I am very scared right now, as its the point of getting worse before it gets better. The house I bought was 36k bank owned, estimated repairs are 10-12k, and after repaired valued is low end 64k.  The biggest thing is you have to think about taxes, double for non owner occupants in Michigan, insurance, deposits to get the electricity turned on and things like that, plus 10k doesn't go as far as what you think, especially if you plan to have work done.  Where at in Michigan? Maybe we can meet or I can show you the rehab if you are close.

Thndrlight

[Baloo]

Now call me crazy, but 25-30k seems alright for 30-45 days work.  I have heard of better, and have just missed out on outstanding, but I wouldn't think 25-30k is a bad place to start.

The agent I am currently working with has taken great pains to tell me that 20% below fmv is whats to be expected 95% of the time.  I am not sure how accurate that figure is, but considering his experience vs mine I have to atleast consider it to be true.

I am in the metro detroit area.  The house I am currently looking at (as of yesterday) is in Birmingham.  It is not an REO but deffinately needs work and is under market value for the area.

It was origonally listed in july for 119,000.  As of yesterday it just went through its second price drop to an even 100,000.  Comps in the area are 135,000 to 160,000 and is a fast market.

Initial numbers are coming in about 13-15k for new windows, doors, siding, deck, garage door, kitchen, and various cosmetics on the interior (we do the work ourselves).

I discussed taxes with my agent (which are outrageous in Birmingham) and according to him since summer taxes are due today, all past due taxes need to be paid by the seller.  And since winter taxes are nominal at best (3500.00 summer, 364.00 winter) I should have a year to ponder the matter.

Let me know wh3ere your at and if it can be aranged we can grab some bad michigan coffee and take a look!

[tedjr]

Howdy Baloo:

Summer and winter taxes are something I have never heard of. Will you explain?

[Baloo]

Taxes here in MI are split into summer and winter taxes.  Summer taxes are always considerably higher since may jobs are seasonal in MI.  Some mortgage companies here in MI will roll your taxes into the mortage payment and then pay taxes to the city, but more often then not the home owner is directly responsible.

Just another crazy thing we do here in MI like making you turn right to turn left, creating a second valentines day, and having a holiday dedicated to getting fat.

Anyone in the southern states have a room they want to rent?

[tedjr]

Howdy Baloo:

The Astro Dome is full. I will look at other places for you to rent.

[Baloo]

Not THAT fat that I needed the Astro Dome.  Sheesh

[kdhastedt]

Hey, I could get on board with a "getting fat" holiday!!!

Keith

[rhm76384]

Hey,
     Keith, isn't Fat Tuesday down your way?
Peace,
Richard

[kdhastedt]

Yes, I guess you're right...probably as close as I'll get to a fat-guy holiday!

Thanx for pointing that out...

Keith

[Baloo]

we never celebrated it in CA, so it was new to me when I moved to MI.

Do you make 2 lb donuts filled with pudding for the event?

[kdhastedt]

Fat Tuesday is the day before Ash Wednesday, the beginning of Lent.  At midnight all of the Mardi Gras revelry is supposed to end.  They have other 'indulgences' rather than 2 pound doughnuts (now there's a case of acid reflux looking for a place to happen!)...watch "COPS" on Fox or Court TV for more specifics!  I guess instead of doughnuts, we have 'tarts'.

It's Louisiana -- things are different here.  LOL

Keith