BiggerPockets

Good job! How long did you put the option out for the sellers and are you expecting them to exercise or take them back and do it all over again?

Also, Bullseyecapfun? I thought that was Bryan Hancock... I'm confused.

@Nick - There are 10 Principals at Bullseye Capital Real Property Opportunity Fund. Bryan Hancock - Acquisitions and Real Estate, Joel Block - CEO, Troy St. Pierre - Projects & Property Management, Randy Eastwood - Compliance, Eric Washington - Communications, I run Technology and Finance. We are a well oiled machine. we're a Team. Want to learn more about us?

So far twice I've been able to keep the lease payments. I can do this forever. Maybe not.

For us, the key has been been quick turnaround on our flips. We know that if a project were to take more than a few weeks, we run the risk of unforeseen changes in the market. (btw, I define "unforeseen changes in the market" as a new comp hits that hurts our ability to sell at our anticipated price)

That's honestly the biggest risk I see in this market -- having values drop between the time you purchase and sell. This also means taking into account seasonal changes in the market, potential weather delays, and not have enough contractors to get the job done quickly and on-schedule.

We stopped buying in the midwest and started buying in niche markets. Made all the difference in holding times!

David,
I completely got out of the buy, fix and sell. I will not take the risk on closing on anything that I do not intend on keeping for a long time. I flip contracts and I buy for the long term now.
I am completely happy with the current state of the economy, although I do miss the days of selling people houses that only had a 550 score! LOL! :mrgreen:

I have several posts below that have gone into detail as to the market I've decided to go after- which is no longer reos/ rehabs etc..

Bryan- Const is the game I'm playing in both UT and TX. Is Big 12 going down? Are my Cougars about to join? Wierd times. Rich

I'm not sure I follow how flipping and new construction are that much different. Strategy is to buy low, add value, and sell to an end buyer.

I agree J Scott. I know it can be done in certain cities. I see it as the same investment strategy though or nearly identical. That was my point. I wish I could build here as well.

I have tweaked my fix and flip model. In my market buyers are no longer willing to pay full price for a all the bells and whistles of a complete rehab. And, as J Scott noted, if a project takes too long a couple of bad comps can kill your resale value.

Over the past few months I've had several qualified buyers tell me they liked my homes but have decided they want to try to find something cheaper and "get a better deal". I've talked to some of my competitors who are seeing the same thing. So I've started selling "prehabs." Basically I make sure all of the major items on the house are new or like-new like the roof, HVAC, electrical, windows and siding. I leave all of the cosmetic items like kitchen, baths, carpet and paint to the buyer. I throw the house up on Craigslist with an ad that says "Fixer Upper for Sale. We already put on a new roof and new electrical service, you do the rest. $53,000 as-is or tell us what upgrades you want. Let's make a deal!" Here is the actual ad: <a href="http://toledo.craigslist.org/reo/2544697966.html">http://toledo.craigslist.org/reo/2544697966.html</a>.

No joke, I had 5 offers over the weekend and just put it under contract last night. I've owned the house for 3 weeks. I sold it for $60k. They want me to do windows, siding and gutters. Those 3 items will cost $5,100. The only bummer is I've owned the house less than 90 days and it is an FHA loan so we will need 2 appraisals and a home inspection. But that's mostly why I sold them on doing windows and siding...the house would not have been able to go FHA as it was. Plus I will need to justify the increase in value to the appraiser.

To add to the above, I have another house that I am buying on Sept 14. I showed it to 2 spin-off buyers from the Luann house today and am showing it to the other 2 tomorrow. One of the showings from today has already spoken to my loan officer and is getting qualified for the next house...before I even own it! I'm not bragging...I'm just elated that something is working again. The old-model of making the place a palace and selling for top dollar has been getting worse every month this year. This new model (assuming I'm not just getting lucky) is really bringing me back to life. It's also nice because I will have way less capital into the deal and way, way, way less time. I hope I'm on to something...