Recently I looked at a foreclosure which from the front appeared to need some work, new roof, shutters, window repairs, painting, landscaping a normal deal but the tell tail sign of the blue plastics occasional wave from above roof the gave away a real problem. The rear of the house had an almost non existent roof, shingles were in piles sheathing exposed and 2 rafters open to the weather. Which caused major damage to that part of the 2nd and 1st floor. The real estate agent didnt tell us the whole story in fact he didnt do anything but copy a listing from the MLS and fax it over. And will expect a 3% commission for that great deed. As most of todays investors we are looking for the quick flip, quick turn over the little TLC jobs where you can make $3,000 to $10,000 without much effort, time, or knowledge. Some of my investor buddies walked away from this project because it is or was a project 2 to 3 months with a month or so of up front planning, permits, architects, and engineers to hopefully make a big payday. It could be 6 months before this project is all done. So jumping in with both feet, we offered a low ball embarrassing price for this mess. We included photos from every angle of the worst parts of the house. From the roof, attic, 2nd floor, 1st floor and down to the crawl space even the cracked concrete driveway anything that was in anyway ugly was in a photo. C/Ds are so helpful when you want to make a point with color photos. Imagine how a black, moldy weathered rafter looks up close on a 20 monitor, it gets your point across. Now we negotiate, with a strong visual presentation they cant offer and excuses or off handed explanations. We know more than they do about their property it will help us maybe not win the war but a good chance to get major concessions on the price. Back and forth on dollars and closing date the only real consideration at this point is how much will the bank get and how fast. The deal is done we agree on a price and quick closing right about where we wanted to be. Our plan if everything goes right is to make $270,000 to 285,000 in 6 months. If we have unexpected problems (labor, material, or weather delays) and we end up at $250,000 still not bad. Purchased at $115,000 plus all the expenses and carrying costs of $140,000 sell for $540,000. Not bad for one deal, remember we are not doing the work we have competent professional contractors and suppliers. We dont even oversee the job call me when its done Ill write the check. |
