I’m a somewhat semi-experienced investor as I have had some moderate sucess reselling land and a couple of homes. However its been sometime since I last worked any deals. So I’m looking to get back into the swing of things by working on find a home to remodel and sell, can someone look my plan over and tell me if my strategy is a sound one?
Basically my goal is to look through the MLS listings in my area (lots of homes on the market these days) and make about 5-10 offers every 2 weeks. I plan on making offers anywhere from 25-60% below asking price on any home that I feel can be easily turned around (remodelled) and put on the market for at least 10% less than what the average home price is listed for in the area. I’ve been doing research on which neighborhoods in my area are seeing the most amount of sales and I’m targetting those areas for my next purchase.
I’m obviously leaving out a lot of detail, but in a nutshell that’s the basis of my plan. Can anyone offer any constructive criticism on this plan? Has anyone had success with this method of investing? I’m really hoping this will lead to perhaps 3-4 deals before the end of the year.
My other question today is in regards to land sales. I purchased approximately 6 lots in the past 3 years with the goal of building new homes, but due to the market downturn right now I would rather sell my land and use that cash for aquiring flips. Right now I have the land listed with a realtor but so far I have’nt had any offers or inquiries. What’s the best way to get rid of vacant besides using a realtor? I know property of this type will likely only appeal to a certain type of buyer (developer or a family looking to build a home), I just need a way to aggresively market the land to these type of individuals. Any suggestions?
Thanks for any advice or feedback
I would stay on the low end of your market for this plan.
You need to have significant reserves to be able to tolerate a long hold time (up to 12 months IMHO).
Be prepare to accept a low offer to get it sold (i.e. you need plenty of margin between you purchase price/cost and potential sale price)
Also, you may have to work thru several offers as I just did a flip and getting even a well qualfiied buyer (20% down, credit score in the midd 600’s) thru underwirting these days was a multi-week process.
Hey Arkitek,
Well you didn't give a lot o info regarding your goals. But One thing I can tell you is that asking price means nothing. You have to determine the value by recently sold homes and the income a property produces. There are a lot resources out there that can help you do that. You'll need to tell us what your financial situation is and what you want to do. These forums are a good source but the more details you can give, the better they can help. I seem to say this a lot, but a good book is "The Millionare Real Estate Investor" by Gary Keller(you'd think I was the one who wrote the book the way I promote it!). Actually it's just a good book with a lot of useful info that helps you get started. Good luck
I’ve gotten some good deals off the MLS, but if all you are doing is shotgunning offers randomly, you waste everybody’s time.
Sift through the properties on offer and look for some indication that the seller might be motivated to sell. That way you have at least a small chance of getting an offer accepted.
Land does not sell well in a down market. Unless you want to dump the parcels for peanuts, you might have to hold tem until the market picks up again.
Your usual buyer for small parcels of land is someone who wants to build a house on the lot. If prices are falling, builders stop building. If price go too low, it is a lot cheaper to buy than to build. Spec builders won’t build in a falling market because it takes so long to complete a house, they are afraid that by the time they finish, it won’t be worth the cost of building the house. (as you seem to be feeling)
As far as throwing offers at people, make sure they are low enough to the point where you KNOW you will make a profit even if the market continues to fall. The last thing you want is to hold a house for another losing year.
As far as the land, holding might not be a bad idea. I suppose you might as well build on them while residential contractors are hungry for work. By the time everything is built, hopefully we will start to be getting out of this rut, and if we aren’t, at least you will be able to rent them out while you wait for the market to pick up again…