Need Advise from Pros - Posted by Larry(WI)


#1

Posted by Laure on November 06, 1998 at 08:40:33:

I agree… unless you are going to do the physical work yourself and not pay a professional, but pay yourself the labor…no upside potential, and too much risk


#2

Need Advise from Pros - Posted by Larry(WI)

Posted by Larry(WI) on November 05, 1998 at 22:18:27:

I’m a new rehabber in WI. How do I find the forclosures & distressed properties first. The pros usually beat me to them. Please help, even the pros started here at one time or another. Also, how can I network with some of the seasoned investors and learn from them? One last thing, I am considering buying a property that was recommended to me by a real estate agent/broker. It is owned by a rehabber that has done some of the work and is willing to sell it before he does the inside work (he finished the outside). The property is not officially “for sale”. The broker spoke to him about me and he is willing to sell it for $100k. It needs about $5k to $10k of repairs and could be sold for about $125k. My question is… why would the investor sell it to me instead of finishing the work and making another $10k to $15k profit? He knows I’m new & the broker is a mutual friend of both of us. Do you think he’s just throwing the new guy (me) a bone?


#3

Re: Need Advise from Pros - Posted by hk CA

Posted by hk CA on November 06, 1998 at 12:51:54:

Most likely the owner will make a decent profit at 100k and would not have to spend thousands of dollars and several months work to possibly make another 10k. If you bought it for 100k, spent 10k finishing the inside, sold it through a RE agent for 125k, paid a RE commission at 7% of 125k (nearly $9000), you’d have a profit of 6k . . . and that doesn’t include holding expenses, unexpected expenses, and a ton of unknowns. Sounds like he’s throwing you a boner.

The reason the “pros” beat you to the deals is because they have two major advantages: Knowledge and Experience. Although it’s true that knowledge comes from experience, it can also be gained by taking courses and reading books on RE. I started buying properties twenty years ago and I began by reading everything I could get my hands on about the subject. I’ve bought more that 50 books and taken many courses and I still today continue to educate myself. I spent $65 at a bookstore last week to get two books that I hoped would give me one or two good ideas. This is a great newsgroup with many well-seasoned professionals adding input and helping others. I gain a lot from it. Someone once said, “If you think education is expense, try ignorance.” That statement couldn’t be more true. Good luck to you.


#4

Re: Need Advise from Pros - Posted by phil fernandez

Posted by phil fernandez on November 06, 1998 at 06:32:21:

Larry,

I don’t think the rehabber and broker are throwing you a bone. Looks like they could be throwing you a problem.

How are you going to make money if he sells the house to you for $100,000 which needs $10,000 in rehab. The property might be worth $125,000, but if you are not in a hot sellers market you will have holding costs. What if you can’t sell for six months. What if you only can find a buyer who will give you $110,000. I don’t see profit here unless everything works out perfectly.

My guess is that the money to be made here will be by the seller/rehabber and the broker. Not enough profit potential for you here. Sometimes seasoned investor rehabbers can take advantage of new people. Be careful.


#5

Re: Need Advise from Pros - Posted by Larry(WI)

Posted by Larry(WI) on November 06, 1998 at 18:32:39:

Thanks to all who answered. Would it be okay if I emailed you with questions or concerns from time to time? I’m trying to learn as much as I can in the shortest amount of time. I need some seasoned investors that I can learn from. Thanks again.