Posted by Ed Garcia on March 13, 2002 at 10:26:08:
Todd,
It on depends on your deal.
When doing a deal you should always have a strategy as to what you’re going to do with the deal. For example if there is not much profit in your deal and you are purchasing it to flip, then of course you’d better have it pre-sold or you might get stuck with a deal with either little or no profit.
The reason I say that is because if you purchased a deal to flip and then didn’t flip it in the give time, you may end up paying out what little profit you had in the deal, debt servicing the deal.
On the other hand if you purchased a deal at 50 or 60 cents on the dollar, it doesn’t matter what your strategy is, because you have enough room in the deal to do what ever you want with it. If you got stuck with it as a hold property, chances are at that LTV; you’ll have a nice property with a nice positive cash flow. So you wouldn’t have to worry about having it pre-sold. Most buyer do not have the properties they buy pre-sold. However they do have a strategy or game plain for the property when they buy it.
I am looking at buying a few rehab homes and as I formulate my exit strategy, I keep wondering if I should L/O the home, use the Bill Gatten PAC trust method, or just sell the home using a realtor and take my money and run.
For those of you that have done this, which way worked best and why? Which way provided the most profit potential?
I was thinking that I may try and sell by myself during the rehab process so I can market as if it were a custom rehab project for the potential buyer, use a relator after I complete the project, and if it is still on the market in 60 days, I will try to L/O or sell using Pac Trust.
Thoughts and suggestions of what has worked the best for others.
Re: L/O vs. Pac trust vs. selling home - Posted by Ed Garcia
Posted by Ed Garcia on March 12, 2002 at 09:29:48:
Todd,
The way you’re approaching this is a waste of time and procrastination. Get out there and get your feet wet by getting a feel for the market.
Secondly, as a deal maker don’t adept or relay on any one way to do your deals. The deal speaks for it’s self. If you did every deal on a lease/option you will be buying either closer to market or none desirable properties. You also will be missing deals. Don’t get me wrong you can make money on none desirable properties but you want to buy them right.
Your best deals can be made with cash offers, so you need to learn how to structure you deals for various types of financing. Financing is the key. The buyer can’t distinguish between cash and financing because it’s all cash to them if it’s done right.
Constantly be looking for opportunity. What system can be useful in one deal may not work at all in another.
If you need help in structuring you deal you can either come here or the main news group.
I always thought that before you buy a property, you should have that property sold. What I mean by that is for the first couple of rehab projects that you do you should have an exit strategy. Know for how much and how you are selling the property before you buy so you can assure yourself the approiate profit.
I am going to have a FSBO while I am rehabbing but after that I was wondering what has worked for others as to vehicle for selling my rehab property.