looks like a pretty good turnaround. His profit was 22% on his investment. and is was a light rehab. not too bad.
I like to get my hands dirtier than this guy, and generate higher profits.
like this: buy uninhabitable 4-plex for 15K. pump 50K into it. rent it up for $1600-1650. I can hold it forever, or sell it for 125K. I have two “outs” that are rewarding and profitable. I like having choices. But notice how the flip-profit rate is higher when the work is major-major.
It is my belief that I have more room for error than someone aiming at smaller profits on lighter rehabs.
By the way, you wanna buy a renovated 4-plex??? just kidding
I like Pats answer when he says ?It’s called knowing your market?.
You told us what the asking price is giving us the impression it was also market, but didn?t give us comparable sales in the area to judge by.
If comparable sales are in the $225,000 to $250,000 range of course it was a make sense deal. If the asking price is comparable for the area, it?s luck.
Re: Is this normal or did this guy just get lucky? - Posted by John Corey
Posted by John Corey on June 17, 2006 at 10:08:43:
Greg,
It can be very real.
It could also turn out that the property would only sell for 10% less (right around $200K) and the closing costs on both sides make the deal very thin. Or that there are unexpected problems, etc.
The 70% rule is conservative, allows you to bail out to another investor and still make a few dollars and will rarely fail. You can use a higher % and do just fine if you really know what you are doing and do not get caught if the music stops.