Hi all. I’m new RE investor looking to purchase my first rehab property in a month or two. I posted a few weeks back about financing the deal, and have found a great broker/lender and program(s) that I’m comfortable with since then. I’ve found a great RE agent I’ll be working with too. Problem is, I just hope I can pull the trigger when the moment comes.
On paper I’ve got no reason to worry. I’m a construction proj. manager, I’ll be doing the rehab with our company guys, I know construction and the $ involved, I’ve lived in the area all my life, and now that the market has stabilized, I think I’ve got a handle on property values.
Thing is, I hear/see so much about RE sales slowing down, I’m concerned I’ll finish the rehab and end not being able to sell, having to hold the prop. for months (6 or more) on end. My backup plan is to hold it as a rental, but I’m not interested in being a landlord just yet. My exit strategy is to sell at a min. 10% profit after fees and holding costs and before income taxes.
yes, and it u r going to worry like that, don’t get into this business. there is always going to be a property that takes longer to sell than another. and there is always gonna be a white elephant, no matter what anyone tells u so be prepared. have enuff funds to cover it if it doesn’t sell. u may want to think twice about relisiting it with an agent to sell. owner finance it or do a L/O or CFD, u will make more cash. y pay a realtor a commision on something u can sell urself and pocket more money? good luck to u !
No, you’re not worrying too much. If you’ve done the work and buy at a large discount to market - you should be fine. If you don’t understand the market and pay too much or underestimate the cost of the rehab, you could take a big loss.
That’s what business is all about. Calculated risk.
thnx for the reply. I’ve got enough reserves to finance with 10% dn and make about 12 months of payments. I’m using a Home Eq. LOC for the renovation costs, and can make payments in the increased line amount. So, I can carry the prop if it doesn’t sell right away. I guess I gotta just do it.
I’m in the same boat as you. I have construction experience and financing as well, but am still hunting for that first place to pull the trigger and buy. I’m nervous as well, but feel that if you buy right and know your market we can succeed. Jeff
If you have a strong 10k in projected profit that means you have 10k to lose without going into your pocket.
If the house hangs on the market and you only make 5k thats ok too! The experience of doing the first rehab is PRICELESS!
You will have learned so much by doing that first deal, you will make up the difference on the next one.
I had a 10k profit built in a deal but I decided to go higher end on some fixtures and stuff that I thought would command a higher price and a faster sale.
The place sold in 1 day after my RE Broker did his local agent e-mail blaster so I know my strategy paid off.
7.5k in my pocket after three months was better than 10k after 6 months.
Mdhaas, I was refering to the poster specifically but I am glad to see you can connect the dots ;)Problem is you took the shortcut and left out 5 other dots.