You won’t want every house… but you might get it anyway…and sell it to someone else.
A few months ago a seller was referred to me by another seller I had purchased a home from in my market. They had a house of a deceased loved one that they needed to get rid of. It needed A LOT of work. A LOT.
So what is A LOT of work? Well, this depends on your risk tolerance as an investor.
Some investors will take on a rehab project of a house that is ¾ falling to the ground and a complete train wreck. Some investors will only take on light rehabs (paint and carpet). I probably fall somewhere in between. You won’t catch me taking on a burn out property (fire damaged) or a complete train wreck… OR certain types of septic systems, old farmhouses, and other types of houses I dislike due to horrific experiences with them.
For me, there are just certain types of houses I don’t like to rehab, and this was one of them. It is a house that needed EVERYTHING!
The house is 117 years old.
It had steps going to the 2nd floor that were so narrow you had to walk up them sideways. There was knob and tube wiring throughout the whole house. It had 3 bedrooms but one was a walkthrough. It had 2 front doors (old farmhouse style). It needed a kitchen, a bathroom, siding on the entire outside, and had a garage that was falling apart, and a shed that needed torn down. Did I mention an awkward layout?
It was no cupcake. I knew when I was walking through that I didn’t want to take on this rehab.
After viewing the house, I told the seller that she could list the house on the market for around $75,000 and after commissions and transfer tax and fees she could probably net about $70,000. OR I could buy the property for cash for $35,000.
I REALLY wanted her to list it on the market.
I had no desire to buy it cash so I came in low. Despite me encouraging her to list it to net close to $35,000 MORE… she was adamant that she wanted no parts of putting it on the market and she wanted to sell it cash. BUT…. she was in no rush. We didn’t settle for almost 2 months! (that’s a long time in an investor’s world).
So WHY sell it cash??
She could have put it on the market and sold it in that time! Her family even cleaned out the majority of the home AND I offered my own clean out people to help finish it for her to list it on the market!
Turns out, there was a feud with the neighbor and some other family happenings going on and they just wanted a quiet, cash sale. So that is what we did.
And THEN……………………..we listed it on the market.
Well first I had it cleaned out, THEN listed it on the market. Yeah, we didn’t rehab it at all. I bought it for $35,000 and put it on the market for $79,000. It was under contract with a buyer in a matter of days. We did zero rehab. Zero.
We will make just as much as we would if we would have flipped it.
Sometimes you won’t want a house but a seller will want the cash offer anyway. Despite me trying to get them to list it, they were motivated to just be done with it.
And once again, it shows that motivated sellers are what we should be aiming for in this business. If you find a house you don’t want, just because it isn’t appealing to you, doesn’t mean it won’t be appealing to someone else.
In this case- someone else was willing to pay more than $35,000 than what we were for the same house! In my case, I don’t pay a commission to list it on the market. But if you are not an agent, connecting with other cash buyers to re-sell projects to is super important. A few months ago students of mine made $8,000 on a wholesale deal that didn’t make sense for them, but made sense to a self rehabber in their market.
The moral of the story? Motivated sellers are key & if it’s not a deal for you…. It just might be a deal for someone else!
April Crossley is a contributing instructor for www.propertymanagement.institue. View her course at April Crossley