Selling a rehab project...quickly

Rehabbing & House Flipping
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Selling a rehab project...quickly

Teren Cooley
Richmond, VA · Member since 2018 · 47 posts · 20 votes

Hi everyone,

So I’m a pretty new investor and I just closed on a property that needs major renovations. Floors, drywall, electric, roof, maybe plumbing, but I’m no expert and can not evaluate these things myself. I do know that there is already a well and septic system and the cinder block foundation still looks to be in great shape. Also, most of the studs along with the stairs still look good. That’s about the extent of my observations.

I bought it because it’s on a nice piece of land near some waterfront and I got it for a ridiculously low price and it just struck me as a no brainer. I’m concerned about cash flow right now and wanna sell this thing ASAP so I can move on to some other deals I’ve got.

How would you guys suggest moving forward? I don’t wanna invest any more at this point unless some inspections are completely necessary. I know the profit margin is there basically no matter what, but obviously I wanna get as much as I can for it. I’m thinking 75-85% I’d assessed. I’m already working on getting it up on the major channels (Zillow, fb, fl) but wanna be more proactive and line up a buyer soon. Thinking about calling builders and contractors but not really sure where to start there. Thanks in advance for your input!

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
7y

Sounds like you bought it without a plan...  Not the best strategy...

First step (at this point) is to figure out what the highest and best use of the property is.  Rehab?  Rental?  Tear-down?

Next step is to figure out what it's worth.  You said 75-85%...but 75-85% of what?  And how did you come up with that number?  Valuating a rehab is going to be different than valuating a rental which is going to be different than evaluating a development deal.  Go back to the highest and best use and figure out a value based on that.

Once you have a highest and best use, you know who your end-buyer will be (in general).  Whether it will be a flipper, landlord, developer, etc.  And once you know the value of the property, you know what you can sell it for.  Start reaching out to those end-buyers through whatever channel is best to reach them and let them know you're selling the property for $X.

Next time, figure out these things BEFORE you purchase...  You may find that the property isn't as good a deal as you thought.

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Amy H.
    Rental Property Investor · Richmond, VA · Member since 2017 · 295 posts · 229 votes
    7y

    @Teren Cooley I’m available too as others have said too if you want a third party opinion on what I’d do if I owned the property. Feel free to message me.

    0Reply
  • Carlo Finotti
    Pittsburgh, PA · Member since 2016 · 7 posts · 4 votes
    7y

    @Teren Cooley

    You can seek an appraiser to complete an appraisal for an ARV (after rehab value). That would give you a directional number that a flipper would attempt to gain on the deal. You can also gain directional comparable numbers off of Zillow or Redfin on recent sales in the area that meet that same SQ FT, bedrooms, and baths. Yet again, it would be directional..

    It sounds like you received a screaming deal, so why not chat with a few flippers or put on the BP marketplace to see if you can work out a deal.

    0Reply
  • David Oldenburg
    Lender · Granite Bay, CA · Member since 2014 · 456 posts · 454 votes
    7y

    @Teren Cooley First, congrats on buying a property for a really good price! It sounds like you may not be real clear on the ARV (after repaired value), as you mentioned the assessor value and that is almost never accurate. I'm guessing you also had other reason to believe this was a good deal, similar sales etc...

    I do a lot of wholesaling and fast flipping (wholetailing).  The key is always price.  I can make money on any deal in any condition, if I get it for the right price.  If you did get it for the right price, it will practically sell itself to flippers and other investors.  Bigger Pockets is a great resource and so is Facebook if you run inexpensive ads in the local area for the home and pitch it as a great under-market investment.

    I also recommend calling a number of Realtors in the area and tell them that you have a great investment off-market.  The more successful realtors almost always have people they know who buy and flip.  They may want a commission but that is negotiable, and a small commission is well worth it to find a buyer quickly and make a profit.  

    4Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y

    @Teren Cooley well, congrats on taking action!

    Ok sometimes BP forums offer a lot answers and insights, and sometimes not so much.  Usually when the topic is very specific to a particular property or situation, then the best anybody can offer will be general advice.  We've not seen the property and most of us aren't familiar with the local market.

    I would say that you have an a great opportunity to partner with an experienced investor in your area.  Go find one you like.  I have one person up there that I can recommend.  Send me a PM. 

    Plus you already have a couple local investors right here on BP that are reaching out right here in this thread! I will say that my best contacts in REI have come not from local events but from BP.

    And doing that does not mean you cannot in parallel follow the good advice offered by @Ashraf Spahi.

    1Reply
  • Brandon Spurlock
    Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y

    Hey @Teren Cooley, congrats on getting your feet wet. It sounds like you jumped on a deal you couldn't refuse - good for you! Maybe there wasn't enough time to evaluate and make a plan, but if you got as good of a deal as you say you got, then that's great!

    I'm a newer investor on RVA too, just about to complete my first BRRRR in the area. I work closely with another investor/contractor in the area, and he and I would be happy to come check it out, give some thoughts, and help where we can. We may even buy it from you!

    I'll shoot you a PM and see what we can do.

    0Reply
  • Adrian StamerPro Member
    Real Estate Investor & Agent · Richmond, VA · Member since 2013 · 319 posts · 167 votes
    7y
    Originally posted by @Teren Cooley:

    Hi everyone,

    So I’m a pretty new investor and I just closed on a property that needs major renovations. Floors, drywall, electric, roof, maybe plumbing, but I’m no expert and can not evaluate these things myself. I do know that there is already a well and septic system and the cinder block foundation still looks to be in great shape. Also, most of the studs along with the stairs still look good. That’s about the extent of my observations.

    I bought it because it’s on a nice piece of land near some waterfront and I got it for a ridiculously low price and it just struck me as a no brainer. I’m concerned about cash flow right now and wanna sell this thing ASAP so I can move on to some other deals I’ve got.

    How would you guys suggest moving forward? I don’t wanna invest any more at this point unless some inspections are completely necessary. I know the profit margin is there basically no matter what, but obviously I wanna get as much as I can for it. I’m thinking 75-85% I’d assessed. I’m already working on getting it up on the major channels (Zillow, fb, fl) but wanna be more proactive and line up a buyer soon. Thinking about calling builders and contractors but not really sure where to start there. Thanks in advance for your input!

     PM me the address, interested in hearing more information 

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    7y

    @Teren Cooley - Any update here?  What did you do and how did it turn out?

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    0Reply
  • Kevin M Finley
    Developer · Kenosha, WI · Member since 2017 · 141 posts · 91 votes
    7y

    Seems like this situation happens often. It sounds like there are already a few local investors offering to help. 

    Join local REIAs or facebook groups and post ads saying "investor special", or needs TLC. Have a few of these guys come out and make you an offer. Don't tell them what you paid or what you think it's worth- neither should matter to them anyway. 

    If their offers are higher than what you're in it, congrats, you're right, you got a good deal. If they're on target or lower, perhaps try to JV with someone to get it done and gone and try to learn how they evaluate deals so you don't repeat the mistake.


    Just my $.02

    0Reply
  • Teren Cooley
    OP
    Richmond, VA · Member since 2018 · 47 posts · 20 votes
    6y

    @J Scott Sorry for the (extremely) delayed follow up.  Everything went very well with the property and I was able to pull off my first major deal.  I ended up closing for 27K after buying it for 7, including closing costs and taxes.  There were a few snags and learning experiences along the way, but in the end I was able to get it done within about a 6 week span.  It was a great deal to get my business off the ground and I have since bought another property, which looks to yield another similar profit (hopefully I can cut the timeline down a little on this one).  I also have another property that I'm working on figuring out how to purchase.  Because of the profit I made on the initial deal, I'm now able to work on a couple different things at once without being held back too much by spending power.  My next goal is to figure out how to scale efficiently.  I plan to do this by forming some relationships with other investors and possibly money lenders to create the ability to work on more deals at once, while on the other hand increasing my direct mailings to find more deals.  Thanks to everyone for all the support and great advice.  I will be more active on BP going forward and look forward to forming working relationships with some of you. Cheers!

    P.S. - Any Richmond, VA investors feel free to message me if you'd like to discuss working on anything together in the future.

    0Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    6y

    removed

    0Reply
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