Hello everyone,
I’ve acquired a 4K, 2BR/1BA house in GA through an auction.
Now what can I do to sell it or get it rehabbed?
Should I collect a deposit from a possible buyer and use the money to get is fixed
or should I try to wholesale it. It is need of electrical, plumbing, carpet, kitchen tile, drywall, tub.
The balance of the 4K is due in 30 days…what do I do now??? :help :rolleyes
Well, you’re quickly learning one of the most important lessons of RE investing! HAVE AN EXIT STRATEGY BEFORE YOU BUY, NOT AFTER!!
Give us some numbers to work with. I’m guessing by what you’ve described that this house is going to need a complete gutting to get up to speed, otherwise it probably wouldn’t have sold for so cheap. How much in repairs, how much is it worth after repairs, etc?
You’re probably not going to find a retail buyer for this type of property, especially with the large glut of properties currently on the market. You’re most likely better off wholesaling this property, and you’ve kind of painted yourself into a corner by not having any rehab funds AND not having buyer lined up AND only having 30 days to work with. Can you pay off the balance after 30 days if you haven’t found a buyer yet?
I’m very much interested in the process you used of acquiring this property at the auction… I’m confident I could market and wholesale a property if I knew how to first get the deal under a similar contract. I guess Im asking what the process was like… how can I get started with no money??? did you make a downpayment? Where can I find contracts to use? What are certain exit stratagies?
I’m working on DealOne myself but havent jumped in yet…
I live in Michigan (SouthWest) and would like any advice from Experienced Investors .
…I suppose I just need to find deals, make offers, and have a buyer’s list in place!
Easy said!
DealOne- if you want to buy props at auction, you’re definetely going to need money, (or at least proof of funds) to do so. Do you have ANY money to work with? remember, sharon bought a 4K property, which is pretty much as bottom end as you can get! even if she had to front 10% of the purchase price it would only be $400 bucks! I don’t know if props this cheap are typical in her part of the country, but I know they aren’t in mine, meaning you’re generally going to need considerably more than that to secure properties through auctions.
You are right in your thinking though, that is, if you really dont have much/any money to get started with, then wholesaling if probably your best best.
They say that you can wholesale anything for the right price, but I know in my market(ga./dekalb county) I don’t have any investors on my list that want a 2 bedroom home.
For 4k maybe it’s possible I guess. You may want to look on craigslist for 2 bedroom 1bath homes for rent and call the ones that look like landlords and tell them about your property. Also on www.gosection8.com
If they want it for say 7k then contract and double close if possible. You will have to look hard for a transactional lender that won’t be charging 3k in fees to eat up all your profit. I have one that is affordable if you need.
Also I have access to an attorney in Gwinnett that will allow a simultaneous closing if you have a cash buyer. This way you won’t have to use transactional funding
You’ve got 30 days and $4k is not a lot of money. So my suggestion is for you to figure out how to pay for the thing, and then you have breathing room.
Get the money lined up and hope you can find a buyer before you have to pay for the house. 30 days would be a fast closing, so even if you find a buyer, you might have to pay for the house before your buyer takes it over.
Without the money to fix it, your best course of action is to wholesale it and make a quick buck.
Absolutely, wholesaling will be your best move. If you don’t already have a buyers list, then start getting the word out on Craigslist ASAP. Also, post some signs in and around that area with “Cheap House” written on them, phone number, etc. Maybe try listing in the classifieds. Speak to some local investors by calling up ads, going to a local real estate investing meeting, etc. Good luck!
I think you need to prioritize your exit strategies. Such as Wholesale, rent and hold, rehab and flip, etc in order.
Wholesale - build your buyers list and market it to them.
Rent and Hold - make minimal repairs to get it rentable, a property management company can help you with this and getting a tenant if they are good.
Rehab and Flip - Talk to an agent who specializes in that area. Find out what is a realistic sales price, even have them do a walkthru to discuss rehab. Get some contractors out to take a look and provide a bid.
Even though you winged it on this one, you can still make it a success and at minimum learn a ton. You learn the most by doing, not reading. Continue seeking advice on the forums and from experts and associates you know. Best of luck!
Is it possible to borrow say $8K for acquisition and repairs and offer the private lender a premium rate of return backed by a second mortgage on the property that has a tax value of $19K?
If so, how would you word any ads for the private investors??
Tax value is not the same as market value. Tax value means squat compared to what the property will ACTUALLY sell for on the open market. If you’re asking someone to loan you $8K ($4K for acquisition + $4K repair money?) how is that a second mortgage? sounds more like they would have a first mortgage and YOUD have the 2nd mortgage! Is there anyone in your circle of friends or family, because that’s a pretty SMALL amount to bring in an outside party for…