REAL ESTATE INVESTOR STUDENT FIELD TRIP
Took a group of students out in the field to look at some ugly houses that are being rehabbed by one of my other students-Tony.
We first went to the subject house and looked around and got an idea about what the repair costs would be. Then we went to the recent sold comps that we got from refin. We were able to see from the realtor’s remarks and pictures what had been done to the house. That way we know what has to be done to our house to get top dollar.
Sometimes the streets are different so you have to adjust value. What you do not do is average. That’s what you tell sellers. Appraisers don’t do that. You take the ones that are closest and then make adjustments up or down depending on different factors like how the location of the subject compares to the comp; sq footage; attractivness of the architecture;lot size; and lay out.
We saw three properties and made some adjustments to the solds and came up with an arv. The price paid, hopefully, was 70% of arv minus repairs. That number will get you a profit of between 13 and 16%.
Don’t forget you have closing costs in, holding costs and sales costs. So if a realtor tells you that you can buy a house for 300; put 20 into it; sell it for 375 and make 55k , that is crap.
How did my student get the deals? By working hard, folks. He has signs everywhere and door knocks people in foreclosure until they either sell or the bank takes it. I hate to sound like a broken record but YOU MUST torture these people until they take action. You are doing them a favor. Why should they walk away with no cash and a foreclosure on their records for 10 years?
Remember you are building a business. It’s slow at the start but after awhile it mushrooms.
DON’T GIVE UP!!!!.
