Let’s just say I’m a sucker for the latest tech/music/audio gadget on the market. My most recent non-real estate related acquisition was the Droid Bionic 4G phone. Was there anything wrong with my last phone, the Droid X? Yes. It wasn’t 4G. That was reason enough for me to jettison the one-year old 3G smart phone dinosaur.
I guess that’s why I enjoy the fix and flip business. It allows me to acquire big ticket items on a fairly regular basis. In the last month I’ve bought 5 houses using 3 different acquisition strategies:
- Trustee’s sale (foreclosure auction)
- REO (real estate owned or bank/lender owned)
- Short Sale
I’ve used other acquisition strategies in the past – wholesale, probate, assignment, normal. My all-encompassing real estate acquisition strategy is PURCHASE ANY HOUSE THAT MEETS MY PREDEFINED BUYING CRITERIA. If it’s a deal, it’s a deal. It’s not important how I bought the house, or from who.
It really shouldn’t matter to you either. Just decide on the following, in advance of your next fix and flip purchase:
- Property type (single-family detached, condo, multi-family)
- Approximate size
- Wholesale purchase price
- Retail sales price
- Rehab costs
- Profit expectations
For example, I want to buy a minimum 3 bedroom, 2 bathroom home with a 2 car garage between 1,500 – 4,000 square feet. The minimum wholesale price I can expect to pay is $140,000 and goes up to $300,000. Ideally, the retail price of my flips will range from $200,000 to $450,000. I don’t want to spend more than $20,000 on rehab and like to net 8-10% profit on the retail sales price of the house.
With this criteria in place I can more objectively analyze a deal brought to me by a bird dog, wholesaler or Realtor. And in case you were wondering what cheap red wine I recommend – any of them that come in a box will do.