hi. i am new to rei. .i live in houston, tx and purchased my first property for 49,000. The comps in that neighborhood are 70,000 to 75,000.i am in construction so i can do all cosmetic work myself. My question is should I stick with this formula being that there are many investors that purchase properties in these same areas for 20,000 to 30,00 cash. when talking to investors most of them would pass on a deal like mine because of the profit margin. With myself doing the work i am saving tons of money on labor and materials. I am trying to avoid alot of the competition with seasoned investors.I plan on doing several of these in the coming year by staying away from the super good deals. I would like some feedback on this and maybe some other ideas. My cash reserve is about 10,000 and my credit score is 680. My primary home has about 30,000 in equity.
You bought it for 49
The after repair value ARV is 70
- 49
How much is the rehab cost -
holding cost -
buying cost -
selling cost -
money cost -
Your profit is =
???
Bruce
Just my thoughts: Why let someone else eat the steak while you eat a slice of bread? Do you work for free? why not pay your self for the work you will be doing? why would you rather make 10k and not 25k? :
He isn’t paying someone else for the work he’s doing. He’s not paying for labor, so he IS paying himself. It’s in the form of higher gross profits at the end. If you pay yourself $10,000 in labor it’s deducted from your bottom line profits after the sale anyway. It doesn’t matter how you account for it the numbers add up to the same dollar figures.
I am almost done rehabbing it and I have spent about 1400 dollars on materials like ceramic, kitchen cabinets, laminate floors , and paint. I project to spend only about 1200 dollars more. So far i have spent two and half days rehabbing this property. I want to see if I am on the right track. I know every deal is not going to be a homerun so I’ll be patient and hit singles.