Buying cheap, fixing, renting out - and then selling to other investors?

General Real Estate Investing
1

Has anyone ever bought rental properties at a good price, fixed them up, rented them out so they’re cashflowing nicely, and then sold them at a good price to other investors?

I’m trying that out here in Dallas…and I just wondered…why didn’t I do that before? To me it seems like a great way to buy & sell property, again & again & again. Everyone wins. The tenant gets a place to live, the seller (investor A) makes a profit and the buyer (investor B) gets a rental nice & easy - at a good price. Obviously sophisticated investors who do their own deals from scratch, like Propertymanager, would not buy a property that way. However some investors may not like having to find wholesale deals on their own, or do the fixing up of the property…you know? Anyway - I’ll let you guys know how things pan out.

Thanks,
Motivated CEO

2

Let us know, thanks. I’m very interested. I am working on exit plans for the future on my units. Are you going to carry paper on them? Won’t cash be hard to get, or loans?

Furnishedowner

3

Yeah, seems like this would be a good way to entice some newbies to get a property. You market as being rehabbed recently and most people think if the rent pays the mortgage, its a “good investment.”
I’m too greedy. I’m holding my places…

4

I agree you should have an easy time selling to new investors I would say they would be your best sales market.

id recommend that you go to one of those free 3 day seminars and network and explain that you are an experienced investor that sell properties that are already rented out at a nice cash flow give out your card/ website and get contact information for all of them (like shootin fish in a barrel)

5

I’m actually going to carry notes on some, yes, but not my current three that I’m putting on the market. They’re at such a good price someone is bound to have cash for them.

I know some investors go nuts over investing in residential rentals in Texas, but to be honest I can make money a lot faster in more niche market forms of investing without getting over-leveraged.

E.G. In my main business, which has nothing to do with real estate, I get about $1 back per year for each $1 invested. That’s about a 100% annual percentage yield. Not bad, eh? And the tax writeoffs are far, and I mean FAR, better than residential real estate. Obviously I put all my non-excess investment cash back into it first & foremost. But excess cash goes into real estate & stocks (in which I’ve done extremely well on recently, but that’s another story).

With real estate, I’ve been heavily investigating “other” niches that have much higher yields…mobile home parks, self storage facilities, notes, furnished rentals (your business model, lol), wholesaling at a commercial level and/or with more expensive properties, hard money lending and even tax liens - which in Texas yields 25% at minimum (not necessarily per year…the lien could be paid off in a month and you still get 25%) - which is my understanding the best in all 50 states. I think this buying/selling of rented rentals could be another niche that could be interesting too. But for now it’s just an experiment. In a worse-case scenario, I’ll just hang on to these debt-free rentals and still make a decent yield on them.

6

Good tip from dprsunlimited–if you live in an urban area that HAS real estate seminars.

Furnishedowner

7

There is a guy in Houston doing just that. He contacted me today. He has 20 for sale. They are new already rented at $866 to $1250. They are all 1726 sq ft with 4 bedrooms, 2.5 baths and a 1 car garage. They are for sell at $75,000 each. They nominally have a PITI of around $700/month.

I would guess that he will sell them out. I don’t like new neighborhoods (they may mature into slums) and I don’t like 1 car garages (that house is obsolete and will cause a lot of cars to be parked on the street aiding in breeding a slum). I especially don’t like other people’s tenants (I have no idea how they were screened).

There are only 2 causes that gets anybody in trouble in real estate a) greedy or b) lazy. This smacks of both.

8

I was thinking recently that this strategy would be a good one. Especially since it would open you up to investors nationwide rather just in your local area. Few people are going to buy something that needs work out of state, unless they are already well established in that state.

This way they start off w/ fully occupied rentals in good condition.