B and Tom,
I probably have 12-15 SFHs that I use as rentals. I have been concentrating in the last several months on multi-family buildings and have 2, 3, 4, and 6 unit buildings in addition to the SFHs. In addition to the rentals, I wholesaled 4 SFHs last year.
I flipped the last 2 houses that I bought. They were bank owned (by the same bank) and I bought both of them for $21K each. I immediately wholesaled one to a local investor for $35K and sold the other one three weeks later to another investor for $37,000. They would have made excellent rentals, but I was trying to get my multi-family rental business up and running and didn’t have time to work on them. Both of the investors did a minor rehab to these houses (about 5K-10K) and are selling them retail for about $70K each.
The last SFH that I bought and kept for a rental was a 2 bedroom 1 bath house that I paid $17,000 for. I put $2K into it (paint, carpet, etc) and rent it for $500 per month. The house appraised for $52,000. I bought this one late summer or early fall of last year.
I suppose that the average price that I paid for my SFHs was $25-30K and the average rent is $500-$600 per month. These are all nice bread and butter city type houses. The average retail value is $60K-$70K. I bought them in a variety of ways - several REOs, a couple from the MLS, some where the owner called me, a couple from disgruntled landlords, etc. Now, I am buying most of my apartment buildings by word of mouth (networking at REIA, disgruntled landlords that I meet by accident, etc).
Just today, I received a call from my realtor (who also works at a modular home lot). They received a foreclosed double wide that is nearly new and wanted me to bid on it. They sell only modulars and don’t want a double wide on their lot. I think that I might be able to get it for $12,000 and it needs about $5,000 in work. The owner paid almost $50,000 for it. I can buy a lot in the boondocks for $12K and do the improvements myself for about $10K. I’ll have $39K in it and it will be worth $95K retail. That’s how I get a lot of my deals. People know that I’m a serious investor and they call me when they want to sell their property quickly.
When I said the good deals are no more than 1% of the houses for sale - I meant total houses including MLS, FSBO, etc - all houses.
Finally, these are NOT abnormal purchases for serious investors. In fact, I know another full time investor that almost always buys at prices that are well below my range. I am constantly looking for better deals and they are out there. Many, many other investors are doing the same thing that I do and many are doing it better. As I’ve said many times before, just because it doesn’t work in the hot markets doesn’t mean that it doesn’t work in the vast majority of the country - IT DOES!
You can’t get these deals long distance. If you’re in another state, you’ll never even hear about them. To get these good deals, you have to live where the deals are and have local contacts.
Good Luck,
Mike