It’s a common misconception that you have to “fix up” houses in order to sell them for a profit, but nothing could be further from the truth. I have a made a pretty penny flipping ugly houses to other investors, who spend their time and money making it look nice, while I spend my time cashing the checks.
The difference between a successful investor and one who sits on the sidelines, is the ability to eliminate emotion from the purchasing decision. To make money on ugly houses, you have to look solely at the numbers, to determine whether a profit can be made. New investors will oftentimes walk into a stinky, trash-filled, rat-infested house and turn around and walk right back out. They mistakenly allow their 5 senses to determine the deal’s value, rather than the dollars and cents.
I recently received a short sale lead (pictured) from another investor that was an absolute mess inside. Most of the windows had been broken, virtually everything needed to be repaired or replaced, and the home was full of trash (and had the smell to prove it). While most investors would turn up their nose at the opportunity…I smelled money, and decided to negotiate an aggressive price with the short sale lender.
The lender was owed over $80,000, and yet they settled with me to purchase the home for just $14,500 BECAUSE it was in such poor condition. Unfortunately, even at $14,500 the numbers DID NOT work for me as a renovation project because it was in a high-crime neighborhood that didn’t lend to a lot of new home purchases. HOWEVER, it was a great RENTAL area, and there’s always another investor who will find treasure in what others see as trash.
So, we listed this property on the local MLS, and found an investor-buyer who was willing to $24,500 cash, and close quickly. I purchased this ugly house in the morning, and turned around just a few hours later and resold it to the end-buyer for a $10,000 PROFIT …all without repairing a single thing. Now that’s a good days work!
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