Retailing Houses as an Investor!
Would an extra eight to ten thousand dollars help you out this year? If you answered yes then you should be retailing a house. I don't know how many times I have been asked by a new investor where to start or what to do first. If you currently have a job and eight to ten thousand would help you out, then you should be retailing.
Retailing is the process of buying, fixing and selling a single family house to an end buyer who wants to live there.
Why start with retailing? Well, when you wholesale or flip a contract you only make a few thousand and you have to follow up on a ton of leads to find a good one. ( I get about 150 to 250 calls a week for wholesaling and flipping) Secondly, you have to hope you bought it better than all the professional full time investors who have twenty four hours a day to look at deals. As you can see the odds are against you.
Now what if you only had to look at ten to fifteen houses to get a good deal. Take that deal and force the appreciation of the property through repairs. Even if you didn't do a great job, you are left with at worst with a good rental property that needs no work and you own for less than 75% of it's fair market value.
Now, if you are selling the property you should be netting about eight to ten thousand. How many times a year do you need to do that to make a difference in your standard of living. This is why I think retailing is much better than wholesaling or renting, because when you get a check it is a substancial amount of money. This gets your mental attitude toward real estate much more upbeat, because you can see substancial progress for your effort.
When you rent, you might make $50 to $100 per month, but you have all kinds of problems. More importantly, with only a few properties you don't feel like you are getting anywhere fast. Don't get me wrong, if you have a hundred units $50 to $100 starts to add up.
Let's face reality through, most beginners don't buy one hundred units. They buy a couple, get aggravated because there is not enough cash flow and quit .
Retailing, provides a preset plan. You get in, and get out!!!!! You achieve tangible, measurable and most importantly results that you can spend. Ask yourself, could I do just two retails in one full year?
When I decided to sale the Tanning Salon and the Car Wash in 1999. I set up my next plan with retailing as my ultimate weapon to acheive Financial Freedom. It has done that for me and it can for you.
I have been able to retail MY own properties at a rate of 2-3 a year. With the money that I make on the sale of the single family, I am able to buy and rehab a multi unit without the burden of a mortgage. I am currently in the process of closing on a duplex that I was able to purchase through the sale of a SFR I purchased in Jan 2004. I will be doing a reverse 1031 on this property due to the fact that the house I purchased in January was FROZEN. It took a month for the house to thaw, so work was delayed. So I am closing on the duplex before the SFR is sold. I paid $28,048.64 for both properties. I have the SFR listed at $69,900.00. I currently own all of my multi units free and clear due to retailing SFR's.
I hope someone can use this information to benefit them.
Laurie Ann Waltz
President
Nu Image Real Estate & Development
laurie,
You say it well. At the present time on the Spike Market here in Southern California. I find most of the experinced are sitting on their hands as the Spike is so high they feel there are no buyers. Strangely enough there are and most of them newly arrived with capital from the Middle East and Elsewhere.
What I see is the buy of a house that needs work and in transaction the achievement of a 90 day escrow to close and imediate possession to improve an correct the property. Perhaps the release of a few thousnd dollars through the escrow to seal the deal.
I display the signs and heavy crew the work to the point of tripping over each other. I market with really funny clever signs. I always install a gimic. Solar Panels, Radient heating or a booster tank on the hot water line to cut cost of heating hot water. I make sure that these items are displayed in the signs. I even list the trades by name. Sort of a little advertise for them in exchange for even faster work completion.
Having lent my Contractors License some years ago to a dear relative which terminated it. I was not about to allow her to continue her highly creative non commercial activities. So now freed from the need to maintain Workmans Compensation which in this state requires about a $10,000 investment. I can now rely on the Subs to insure themselves. This holds my rehab costs way down.
I then offer my newly arrived customers the jproperties for sale at top market. Sometimes I am so high that I must take back a PMTD. Purchase Money Trust Deed. I can always lay it off at discount or add it to the pile which makes you a dear friend of the banks if you have to borrow to cover your activities.
You have once again written on a situation which is always with us. Spike market or slider. It is applicable. Thanks
Lucius
It is Monday here in LaLa land and this holiday rather then sit at home and get bombed toasting my friends who did not make it back from their last missions, I decided just to go out and cruise the valley and check on sales of the smaller single family homes. I saw alot on a fan sweep from Woodlnd Hills all the way East to Sun Valley.
The results are that there is an on going continual opportunity for rehabber to bring into present conformance and marketability some of these elderly under 800 Sq. Ft houses. Almost all that I saw had failed to service the present time requirement for the Great Room. You know where you combine the kitchen, dining room, library and family area or entertainment area.,
All that I looked at were still cut up into little spaces. You know, mother goes into the kitchen and the guests do no see her again until desert. As to her watching the game while cooking with the rest of us in the entertainment area, forget it.
The biggest hurdle is usualy a bearing wall between the kitchen and the living room, etc. So address the problem. Take the wall out and insert a beam. I love glue lams. Something about the look of real wood. It solves the problem. Usualy at the end I do an indentation into the wall if necessary and insert the biggy TV and the speakers etc. It works well and does move your house into the 21st century. What is best it makes the Buyers love it and up goes the price way past the cost of the opening up of the true living space. Hurray for the Great Room a veritable treasure trove of value. Good for at least $15,000 up in price.
Cheers Lucius
So many years ago I bought this little two story victorian on a quiet side street in Chicago. The then-wife claimed she really liked victorians, mostly I think she wanted out of the high-rise condo we lived in but that is another story.
Personally I don't like those little chopped up victorians all that much. 4 bedrooms but none bigger than 9x10 and someone had paneled the whole place in this cheap dark-wood panelling that made the place seem even smaller and darker.
So I spent the next couple of years renovating the house. As Lufos suggested I removed walls and put in beams. Put a set of french doors between the kitchen and the dining room. Knocked out the wall between the dining room and the living room and made a great room. Removed all that dark paneling and painted everything bright. Removed the wall between two of the bedrooms on the second floor and made a master bedroom.
Tore off the roof built the biggest dormer you ever saw (very inovative design. the pitch was a 12/12 on the original house and I maintained that on the end walls of the dormer. 4/12 pitch on the roof. Continous windows along the south wall-- great light and space, exactly what a vicorian needs. Added another big bedroom and an office up there.
So one day one of the neighbors comes up to me and says, "Mark you are one of the strangest guys I ever met."
"Hows that Bill?"
"You're the only guy I ever knew who bought a perfectly good house and proceeded to throw half of it into a dumpster."
Long live the open plan.
Damn Mark,
What a dream house you created. The Dormers draw me like a magnet. What fun to see it come alive. Style and function. I am impressed.
Congratulations Lucius
Mark,
That's hilarious! I was almost able to envision the whole scene unfolding. You sold that house? It sounds awesome. What are you working on now?
Lena
Well Lena, technically the now ex-wife sold the house. She got it in the divorce. Decided the quiet side street was too dangerous and moved to Deerfield of all places.
Now I live in a very funky loft (three bedrooms, two baths greenhouse on the roof and 4,000 square foot roof garden/deck) in Humbolt Park. Home of twenty thousand Puerto Ricans and one crazy gringo. Although the yuppies are only two blocks away. I actually saw a blond woman walking a standard poodle today on my walk to make the bank deposit. I can remember when a dog that big in this neighborhood that wasn't a doberman would have been stew.
Anyway I love the loft. Did the buildout myself right down to the furniture. Even did pottery classes to make the dishes. Great views of the sunrise over the city from the master bedroom and of the sunset from the deck. Big window wall that faces south. 50 feet wide 8 feet tall on each of two floors.
Oh and a big open plan great room (per Lucius) which is living room (with fireplace), Kitchen, dining room and office all in one.
What am I working on now? Several commercial deals and a company to buy bad commercial paper and do the foreclosures. Kinda trying to get out of the construction end of the business. Spend less time with carpenters and more with bankers and lawyers. Though, like Lucius, I enjoy "playing in the dirt" too much to completely give it up.
Also looking for a warm-weather project somewhere in the gulf. Preferably a harbor or marina even as far west as Honduras or Belize.
I also teach a couple of classes at the Discovery Center. One on home renovation and, in the fall, my first attempt at a real estate investment cl*****.
And since its summer I sail. Since you're close by in Skokie come on down some Wed. or Sat eve. and we'll sail out and watch the fireworks from the lake side. The view from around the lighthouse with the city in the background and the fireworks overhead is pretty awesome. If you bring the picnic basket you can bring guests as well. As I have pointed out before on this site it really is a beautiful city to live and work in. Except for January through March of course. Thats why I'm looking for that harbor in the Carribean.