{"id":542,"date":"2017-06-19T10:30:23","date_gmt":"2017-06-19T14:30:23","guid":{"rendered":"http:\/\/www.realestatejunkie.com\/blog\/?p=542"},"modified":"2017-06-19T10:30:23","modified_gmt":"2017-06-19T14:30:23","slug":"bigger-profits-when-you-buy-a-short-sale-and-retail-the-home","status":"publish","type":"post","link":"https:\/\/www.realestatejunkie.com\/blog\/bigger-profits-when-you-buy-a-short-sale-and-retail-the-home\/","title":{"rendered":"BIGGER PROFITS WHEN YOU BUY A SHORT SALE AND RETAIL THE HOME!"},"content":{"rendered":"

\"\"<\/a>When I am purchasing a property either for myself or with my student\/partner, we determine which exit strategy is the best for both parties.\u00a0 Knowing whether you want to wholesale a property for a small profit or rehab\/retail it for a big profit is important.\u00a0 Many investors start off with wholesaling the properties because they either don\u2019t have a money lender or partner to help them rehab\/retail the house and sell it for a bigger profit.\u00a0 If this is you, then I believe you really should find a partner or money lender so you have more than one exit strategy.<\/p>\n

When you purchase a short sale, some of the lenders will put a hold time for the new buyer requiring them to hold the property for 30, 60 or 90 days before they can resell the property for a profit.\u00a0 In addition, they may tell you that you can only make a certain amount of money on the property if you sell it earlier than 90 days.\u00a0\u00a0 Holding doesn\u2019t bother my student\/partners or myself because we normally choose to rehab the property and retail it for a higher profit.<\/p>\n

Let me tell you about a home that a student\/partner and I purchased.\u00a0 It was a short sale on a home in St. Petersburg, FL that was vacant for about 7 years.\u00a0 The area was an up and coming neighborhood and the two houses directly across the street from the home sold for $195,000 and $240,000 which both are smaller, only 2 bedrooms, one car garages and no pool.\u00a0 The area was known for termites.\u00a0 We replaced all rotten wood, treated the home and provided the buyer with a 1 year termite bond.\u00a0 So \u2026 after negotiating the deal for some time, we purchased the 3 Bedroom Home, 2 Bathroom, and Pool with approximately 1500 Square Feet for $69,900.00. \u00a0The garage was already converted but needed repairs. This home was built in 1950 and needed everything from Roof, Electrical, Windows, Air Conditioning, and Pool repair.\u00a0\u00a0 The repair budget when we started was about $65,000 and we ended up around $75,000.\u00a0 The short sale lender placed a 90 day hold period on the Deed so the Buyer could not sell it to a mortgage buyer for a period of 91 days.\u00a0 Since this was a huge rehab with a large profit we didn\u2019t mind fixing up the home.<\/p>\n

So what did we do to the home to get it move in ready?\u00a0 We were trying to keep the costs down and were going to keep the existing roof that had about 3 to 5 years left but decided to spend the additional $8,000 to replace the roof.\u00a0 We received multiple quotes from electricians ranging from $3,700 to $40,000 to upgrade the electrical box and replace all the switches and plugs.\u00a0 We ended up paying around $3,200 for the electrical.\u00a0 The air conditioning unit needed to be replaced so we contacted an a\/c contractor associated with the REIAs and got a great deal of $5,100 which included 5 new runs, new box, new air handler and new compressor.\u00a0 If we didn\u2019t have to add the additional runs and new box, we could have gotten it for only $3,500.\u00a0 We had to get hurricane glass windows which were almost double the amount of the windows of non-hurricane glass windows!\u00a0 We used Home Depot which was American Craftsman and the cost was 2 times cheaper than the quote we received from ABC Supply.\u00a0 We painted the vinyl siding of the house which painting any house gives a great curb appeal.\u00a0 We had to replace almost all the flooring in the house except we refinished about 600 square feet of wood flooring for $2,600 in the living room, dining room, hallway and 2 bedrooms.\u00a0 They were beautiful.\u00a0 It would have been cheaper if we didn\u2019t want them to replace the bad wood in some of the rooms and two closet floors.\u00a0 We tiled the family room, 2 bathrooms, kitchen, 3rd<\/sup> bedroom, hallway, utility room and office area.\u00a0\u00a0 We needed all new doors, hinges, knobs, some baseboards, light fixtures, ceiling fans, kitchen cabinets, granite counter tops, bathroom cabinets, new shower tile, new tub and surround, all new faucets, toilets, mirrors and more.<\/p>\n

The outside wasn\u2019t in too bad of shape but needed some TLC.\u00a0 The wooden fence around the backyard needed minor repair, we only replaced the bad pieces and power washed the fence.\u00a0 The backyard we covered completely with red mulch because there was no grass.\u00a0 The front yard, we just raked and put red mulch and plants around the flower bed area.\u00a0 The pool was another story.\u00a0 We had it acid and power washed and it still looked yellowish in spots based on the white body color.\u00a0 We received quotes from $3,900 to $9,800 to just refinish the body.\u00a0 My partner\/student\u2019s son works for a company that purchases real estate owned properties in bulk and he told us that they were just painting the inside body of the pool.\u00a0 We checked into purchasing the correct paint for the pool and with material and labor it costs us $1,300 to refinish the pool.\u00a0 The paint life line for the pool was for 5 to 7 years.<\/p>\n

When we first started rehabbing the property the best comparable we had was a house that sold for $220,000.\u00a0 After rehabbing the property for 2 months, the values of the properties increased and we are able to list the house for sale for $264,900.00.\u00a0 We could have spent more money on the property but as an investor, you must understand that you are not going to live in the home and this is a business.\u00a0 So safe something for the new homeowner to do!\u00a0 When we sell this property, the profit to be split will be between $70,000 and $90,000 depending on if we receive our list price and\/or if we have to contribute to the buyer.<\/p>\n

If we were going to wholesale this property we would have wholesaled it to a seasoned investor with a profit of $30,000.00.\u00a0 Any rehab over $30,000 is very hard for a new investor and we figured without the roof that rehab cost was above $65,000.\u00a0 So, I am asking you was it worth the hold time and extra $40,000 to $60,000 profit to buy, fix and resell?<\/p>\n

Based on this article, I hope I have persuaded you to start going after pre-foreclosures and retailing for bigger profits.\u00a0 You can also find pictures of the house on my facebook account if you would like to see the finished product.<\/p>\n

Happy House Hunting!!!<\/strong><\/span><\/p>\n

Kimberlee Frank<\/strong><\/span><\/p>\n

www.ForeclosuresGoneWild.com<\/a><\/p>\n

www.RealEstateJunkie.com<\/a><\/p>\n

www.ShortSaleNegotiating.com<\/a><\/p>\n

www.SellFastRealty.com<\/a><\/p>\n

Like me on www.facebook.com\/foreclosuresgonewild<\/a><\/p>\n

Like me on www.facebook.com\/sellfastrealty<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

When I am purchasing a property either for myself or with my student\/partner, we determine which exit strategy is the best for both parties.\u00a0 Knowing whether you want to wholesale a property for a small profit or rehab\/retail it for a big profit is important.\u00a0 Many investors start off with wholesaling the properties because they […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,11],"tags":[],"class_list":["post-542","post","type-post","status-publish","format-standard","hentry","category-local-guru","category-free-articles"],"_links":{"self":[{"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/posts\/542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/comments?post=542"}],"version-history":[{"count":0,"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/posts\/542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/media?parent=542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/categories?post=542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.realestatejunkie.com\/blog\/wp-json\/wp\/v2\/tags?post=542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}