I read over the article on straight real estate options…
I want to locate abondoned,boarded up, or distressed properties as I feel these will be the most motivated seller's. I also plan to look for better shape properties but feel the worse ones will be the lowest hanging fruit. I plan to take control of the property using the option and rehab it.
I just completed a rehab of a crack house the company i worked for paid $2800 hundred and the rehab was $20K, I did all the work in 4 weeks, roof, siding, drywall, paint, carpet, new hardware, etc. The place is in great shape now and many people have come to fill out rental apps. Oh and plumbing!!! LOL. My guys have to be in it under $30k and will appraise over $60K. The neighbors are very happy to have this place looking nice as many are older or hard working and glad to see the turn around.
My strategy is:
1. To take control of the property using the option.
2. Rehab with materials I pay for.
3. Provide labor myself.
4. Sell to homeowner or investor as turn key rental unit.
I hope to take control of a better property using the option than I could buy outright and also save closing costs. What are the pitfalls of this method? I already have 7 houses I am tracking down the owners on.
You seem to be on the right track, don’t know that I would risk so much money if all I have is an option though. How long are the options you are using?
I would never put more than $1,000 into a house that I don’t have title to. Way too many things can go wrong, including the owner could have it get foreclosed or have a lien attached to it that would have to get paid off before title could be transferred.
I would focus only on houses I can get title to
I also don’t buy in areas where there are crack houses, especially if my goal is to flip the house to an owner occupant buyer.
What is the option worth if you were forced to sell the option to an investor? You may not be able to sell the house quickly. You may even have to get it rented to keep it afloat until you sell it.
I agree with Hassanar, way to much money to put into a house that isn’t mine. To risky. I’m not dead sure on this but aren’t straight or pure options non-exclusive. If they are then you could fix it and the owner could sell to someone else. Do the Option on something that doesn’t need the rehab. Herbster