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I have bought, rehabbed, sold and rented single and multifamily houses as a side line for 15 years. Has been a nice side line with great tax benefits and have made a few dollars too. I have bought bank repossesions, run down privately held property that the city has condemned, traditional seller, and auctioned houses. It all depends on the time, economy, and you have to look at as many angles as possible to get them to work and be profitable.
I have had good relators, but most just want to sell to couples looking for their first or second home. I have had good relationships with bankers that go away when they leave the bank and the new guy would rather make car loans, or the bank changes policy. In either case you just work with what you can get.
All I’m saying is that real estate is just like any other business. Sometimes real good, sometimes not. But it all comes back to the basics, if the profit is not their its time to do something else or do it different. Dan
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My accountant feels that I could make a lot of money by living in a house a couple of years, fixing it up, then selling it. His twist on this old idea is to take advantage of the new tax laws. If I spent at least two years in the house, and did a lot of the work myself, I would essentially be earning legal tax free income when I sold the place. Sounds like a great idea, but is there much profit to be made? By the time I add up the cost of the work plus sales commisions, taxes, etc, I don't see how it could work. Are people out there doing this successfully? Is it more profitable to just clean it up and redo the baths and kitchen, or does it help to add living space? (Raise the roof, finish the attic) My thought is to fix them up and keep them as rental properties. Good tax write off and the tenants pay off the note. Any thoughts?
*I made a lot of money fixing houses up and reselling them--- years ago that is. Before all the infommecials about how to make millions in real estate. Before everyone jumped on the do-it-yourself craze. Before everyone and there brother was out there trying to find the fixer-upper steals. Nowdays, most of the real steals are snapped up by either Realtors who are also investors or one of their investor buddies. It got hard for me to compete against this one guy who has a $400,000 line of credit at the local bank and would just write a check for the whole amount along with the offer.I'm not trying to discourage you, but be very educated and know what your getting into. If a Realtor or one of his buddies hasn't snapped it up already it may not be such a deal.
*Ever read "The Reality of Real Estate"? I know the author really well. It's a book about what can happen when you try to buy real estate by following the advice of the infomercial gurus.
*The big thing is to buy right.. Almost impossible to do these days..
*It is very tough to do in our DIY, infomercial age. Just remember, you make your money when you buy it not sell it....
*We looked at several properties with the same thing in mind. I was hoping to fix it and sell it without living there and use a 203K loan to finance it.Never found the right house.Run down houses are in run down neighborhoods or are snatched up for just a high enough price that I couldn't make a profit.
*I think the trick is to build new construction...if you can build and do all the trade labor yourself and then sell for retail...half the retail cost as untaxed profit, not even SS...no WC...nothing.near the stream,aj
*I was lucky, buying before the local housing market went nuts. Bought houses no one else wanted to tackle; bought another to move for less than the cost of the materials to frame it. Each neighborhood seemed poised for rejuvenation, and by my remodeling the worst house on the block, i helped that along. One has quadrupled in value since i bought it.Assumed another's loan when i first started (hard to find now), refinanced to buy the second and bought the third outright. Will work my way back through the bunch two years at a time until i retire, about age 50.I've rented out the first two i remodeled, but it sure takes an iron-fisted contract, a big deposit, and frequent monitoring to keep your property from deteriorating, plus the right mental attitude to deal with renters, including interviews, overdue rent, late-night calls about plumbing that's been leaking for a week... And if you rent it, the two-year tax thing goes out the window unless you live in it for at least two of five years. And if you do live in two places for two years each, you still have to have a minimum of two years between sales.
*Marks right. "He who holds the gold..."In my area, it seems 50% of the realtors are in it for the multilist to find "deals" like these, nothing wrong with that. A coat of paint, some new carpet, trim the bushes; BAM, I just made $30,000 in TWO DAYS! "If it sounds too good to be true..."
*Even the Realtors are not finding $30,000 overnight deals. I just worked on financing 2 deals for 2 different Realtors-- one estimates he'll make about $5,000 profit, and the other maybe $6,000 to $8,000 but that's after putting in lots of hours of cleaning, painting and repairs. That's if they can sell them for what they think they can.
*So buying existing homes is not so easy, what do all of you think of doing this with new construction every two years...The profits might be way larger wouldn't they?Near the stream,aj
*AJBuild, live, sell is a time honored practice for lots of small contractors. Seems to work very well IF you are in a good market and you do all or most of the work yourself and your family doesn't mind being uprooted every couple years.But, many times folks who do this kind of thing think they made money because they don't really have a handle on costs. For example: One guy was talking about how much money he made because instead of paying for the concrete work he just had another contractor do the job as a swap-out. To him this was a freebie. In fact it cost him an arm and a leg because his time and skill were worth more than the concrete guy's. So, instead of being out making money he was giving the other guy a big discount.
*aj:Every two years? I'm no builder but I'd have to stretch that one out a few more years. My dad built homes in the 60's and 70's in Bucks County, Pa(Philly area). He was tight with a realtor which paid off in buying "undiscovered" real estate which were sold within a year or so. I guess he made some bucks on properties that weren't developed right away.Real Estate values in the area mentioned have balooned. Dad did well, built solid custom homes including the first in '61 at a cost of $29K, sold in '71 for 74K..I was soo pissed(aged 14) as it was a place that had everything on a great 2 acre wooded lot and many places to roam. Then he added to a new subdivision and all of a sudden we lived in a box. I hated it but got used to it. Sold it in four days 5 years later during a VERY trying time in the RE market in '76.In '74 he got a lead from the realtor on buying a 2/2 Florida condo overlooking a 15th green and a par 3 tee shot. How years have passed. That was a tough time for the entire nation and the original price had been cut to 29K from 39K. Imagine that..in Florida?There were other homes built and I grew up in four but he did well until '78 or so. It was a massive crunch for many in that era. Dad had enough and deceided Florida was the happenin' place.I look through a site from time to time that gives out recent resale values from sales in any neighborhood, street etc. and the one my dad built in '61 has sales within the neighborhood of $485k. I'm sure that has happened nearly everywhere. Forty years is a long time but..I'd have to say every five or so.It's always nice to have a realtor on your arm but if they're too greedy they will fail eventually in buying fixer uppers that need more than paint or carpet. I knew one asshole realtor (young punk..like me at the time) that tried to put as little as anything into an older place years back and it burnt down shortly therafter. LOL. He probably covered it.
*Those prices you mention are pretty good compared to my mom's place (also Philly). Bought in '64? for $15k, recently appraised @ $150-160k. That's 10x, your place is like 16.7x value... Of course, we weren't/aren't in it for the profits, I'm youngest of ten (6 at time of purchase) and seven bedroom houses that cheap were kinda hard to find.
*I have bought, rehabbed, sold and rented single and multifamily houses as a side line for 15 years. Has been a nice side line with great tax benefits and have made a few dollars too. I have bought bank repossesions, run down privately held property that the city has condemned, traditional seller, and auctioned houses. It all depends on the time, economy, and you have to look at as many angles as possible to get them to work and be profitable. I have had good relators, but most just want to sell to couples looking for their first or second home. I have had good relationships with bankers that go away when they leave the bank and the new guy would rather make car loans, or the bank changes policy. In either case you just work with what you can get. All I'm saying is that real estate is just like any other business. Sometimes real good, sometimes not. But it all comes back to the basics, if the profit is not their its time to do something else or do it different. Dan
*Avoid paying most of your profit for over priced sales assistance.Just sold my house in 5 days, word of mouth, to a cash buyer. No repairs or inspections either.1080 sq' Portland OR metro area $148.900. Paid $62.500 ten years ago. Made the house so nice price was held back by square footage and area.7 acres in the country here i come. Mt Hood view from the Cascade foothills.joed