Rehabbers and RE Agents
Tuesday, March 23
I know that "rehabbers" (recovering flippers) do not always have a great reputation with Realtors.. mostly deserved I am sure. But I wanted to point out that the relationship can be very fruitful.
We did 30+ homes in 2009 and are significantly expanding in 2010 (goal of 200 properties). In order to expand we had to transition beyond our comfort zone in Atlanta. We had been averaging about a 30% profit margin by rehabbing SFH suburban properties in McDonough (south of Atlanta) all the way through Cumming (in the north) - covering about eight different townships. Typical UGLY houses in NICE neighborhoods; most of them sourced by a RE broker that we have built a good working relationship.
Anyway, we found a couple of investor contacts in TX/MN/AZ who said they provide a stream of good opportunities - but four months later we still only had a trickle of properties under rehab outside of GA. So, using RE social networking sites, we posted our needs to RE Agents across the country and, after a few false starts, we found an agent in a major metro who not only identified over 40 properties to bid on - but the potential returns ranged from 40 to 150%. These properties were inner city markets (which we were unfamiliar with) but fit our requirements and because of neglect had simply become eyesores and deralict. She now has five of the initial bids under contract and we expect to negotiate successfully on another 12-15 over the next 30 days. Considering her local market knowledge and techniques she will also get the listings once we have completed rehab - this equates to a win win scenario for our company, her brokerage, and the neighborhood comps.
The point of this account is to both the rehab and the Realtor communities - work together for success. We now have new, very profitable, oportunities in our pipeline and are actively looking to replicate this elsewhere to reach our 200 goal. I solicit your opinion or how you find good brokers to work with. It's a worthwhile endeavor. Happy networking!