Posted by Mark R in KCMO on January 29, 1999 at 14:55:13:
Jeremy,
One of the factors is the time that it takes to do the whole job. Replacing floor joists, and raising the building to level and eliminating sagging floors, or replacing wooden beams with steel beams can often be done in matters of days not weeks. I the situation arises that I can buy a property, and do 3-5K in work pull out another 15-25K leave the rest of the 10-12K in rehab costs off, and leave 10K-15K profit in the deal, I would much rather be out in a week to a another rehabber, and let them earn thier money over the next month to 6 months or whatever it takes.
Remember, Many times rehabbers are taught to never take on structural problems, and avoid fire damaged properties. When those properties come on the market, there is little if any competition.
As I said before, that isn’t my target, but I can see that there will be times where my resources are better invested in other properties, than to incure more holding costs, and risk, for a profit that actually “yields” less 10K 7 days Vs 40K 180 days…
Those numbers are just plucked from air, they do illustrate the power just doing the Nasty stuff and leave the clean stuff to someone else.
Posted by Joe(IN) on January 28, 1999 at 14:08:06:
I have made some observations, and I thought I would float this idea across.
My market has many many rehabs, and just as many rehabers, but the rehabers in-mass are only wanting the “easy” problems (i.e. paint, carpet, etc.).
I am finding plenty of good deals (many I havn’t enough time for) because I’m not afraid of the “Big” problems as long as the numbers work. It seems that the majority of rehabers will shy away from a house needing a “Biggie” (i.e. a nasty roof or an electrical rewire, code enforcement, etc.).
Why not get control of the house fix the one or two big nasty jobs, and then “flip” it to this huge market of “rehabers”.
Kind of a cross between a flip and a rehab, but it seems like it may be a pretty good plan.
It would seem like if you are going to spend $5,000-10,000 putting on a new roof, rewiring the house, and doing other major stuff, why not spend another 1,500 or so and paint and lay the carpet and just sell it retail. It would seem once you get the hard stuff out of the way that the easy stuff would be a piece of cake and you could make what someone else said is “big bucks” that the rehabbers make.
Fixin’ the Nasty Stuff… - Posted by Mark R in KCMO
Posted by Mark R in KCMO on January 28, 1999 at 16:13:43:
Joe,
That is always one of my exit plans on the properties that I look at, that is one of the evaluations that I go through.
Much of the time the sacry stuff isn’t really all that expensive to repair, it just requires very skilled people to the work. I feel the pool of people capable to do the proper work is small, but the tend to be very professional.
I am not against doing the quick fix the bad stuff and sell it.
I just choose that as an exit plan instead of the target.
If you’ve done the nasty stuff, why not do the easy stuff, hold on and sell for a bigger profit? Just curious. I’ve seen your other posts on this board and it’s clear that you have some experience, so please don’t take offense at my question. I’m just asking why what seems to be the logical next step isn’t so logical.