BiggerPockets

price it right.
aLOT of different marketing.
and most importantly, make SURE that the rehab looks great when finished.

Choosing wrong flooring, carpet, colors...putting money into the wrong places...not having curb appeal...yadda yadda

They all kill your chances

do you guys use allot of adds, intensives for buying realtors, that sort of thing?

I sell my houses for $75k, which means a $575 PITI at today's rates. These houses would rent for $625/mo, but the rentals would not be nearly as nice. I advertise my FOR SALE houses in the FOR RENT section of the paper. Something like: "4br, beautiful remodel, new kitchen, new bath, new windows, new roof. $575/mo. My phone #". When people call I tell them that "I've had lots of interest in the house and am now looking to help someone own it. I can get you in for as little as $500 down (first time homebuyers' grant from the city) and payments around $575 depending on income and credit." 50% of the people say no thanks, 50% say okay. I then ask them to tell me about their income and credit. (The banks I work with need minimum 580 FICO and 40% back end ratio). That eliminates another 25%. The remaining 25% have a shot at qualifying so I show them the house. Remember, they were calling on a rental and are expecting to see a typical rental. They walk into my new rehab and fall in love. They are usually calling my mortgage guy before they leave the house. Now, here's where you need a patient mortgage guy because we've easily gone through 40 showings to get a buyer before. It's usually more like 10 - 15.

This works...my average fix-and-flip in 2008 was 110 days from purchase to sale. My most recent sale was last week. I've never used the MLS to sell and I ANSWER EVERY SINGLE PHONE CALL and SHOW THE HOUSE IMMEDIATELY. Realtors and most investors I know don't do that. If you hustle, you'll get a good product sold.

Originally posted by Curt Davis

Richard,

Way to go, it looks like for found a sucker, I mean a buyer who would actually pay over full retail. Hope you sleep well at night.

I sleep very well at night. When you take the risk of carrying the note you can often get more for the house. It was a good deal for the buyer as well. Had he paid $80k that would have been the fair market he would have had a loan at a much higher rate than I charged due to his poor credit. He also would have incurred points, fees and other costs that he didn't pay with me. It certainly would have cost more than the $85k he paid me and, in fact, he probably wouldn't have been able to buy the home at all. Now he has a nice home for his family that he can actually afford. If I had sold the home to someone without offering financing I could have had all of my money at the time of sale instead of having to wait for it and there is certainly a time value to money. So instead of assuming that I ripped somebody off try looking at the big picture. Homeowners rarely buy homes at a discount, they are the very definition of retail. This buyer tried to buy other houses at retail and couldn't and he now owns a home instead of renting. It was absolutely a good deal for both sides.

:cool:

The seller knew the market because he had been actively looking in that particular area. Did he actually pay $5k over market? Hard to say for sure because of variations maybe he paid $10k over or only $1k over. The bottom line is that to him the house was worth what he paid. The area he is in has actually appreciated due to strong local factors and he could probably sell it for $95k or more today.

:cool:

Thanks Diane,

I think it was just the previous poster's inexperience showing. Somehow you're a wise investor if you get someone to sell you a house for 50% of what it's worth because they're desperate but you are greedy if you sell a house for slightly more than it's worth. A good investor follows the axiom of "buy low and sell high", apparently there are some who feel it should be sell high…but not too high. Makes no sense to me, a buyer is going to pay what it's worth to them and if they don't like the price they move on.

:cool:

I don't see anything wrong or immorral with the way this deal was handled. In fact, the buyer was not mislead or told the property was worth more. The buyer was willing to pay a set price with the terms he could live with and Richard got an extra $5k in price for "waiting" for all his money.

I do question the statement that the home may be worth $90k now as Vegas is not currently (but will be again) appreciating. However, either way, looks like both parties are happy with the transaction and that is ALL that is important in this case.

Fairt enough Richard. I did assume it was in your hometown. Either way, I do not know of any area in the country appreciating at double digit per increments these days. $80k to $90k is well over 10%, which is where my question stemmed from.

My results are very similar to what Richard has posted.

I recently picked up a really trashed 3/1.5/1 with a basement for 28K on a landcontract. My payment is only $149. I put $4,000 in it (mostly garbage removal) and repainted it, new furnace and new carpet. I have it on the MLS (I'm a Realtor, too), the local paper and Craigslist for $74,900 on a land contract and I've gotten over 25 calls in four days. I'm expecting a PA any day now... If I wanted to cash out, I could probably only get about $65K for the property. But, since I'm willing to hold a LC I'm getting a very good response. You just have to give the people what they want: Seller Financing!