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We purchased a foreclosure in 2009 for 87,900. With about 50k invested into it our home is very much comparable to homes that are selling for 200-235k.
My son bought a semi-attached home in NY in foreclosure 2 years ago and put 20k into fixing it up. The two comps that were sold in his neighborhood have sold for 80 and 90thousand more than what he paid and put into it, so he made a good deal. It doesn't matter in the long run because the home is affordable for him, less than any comparable rental they could have gotten, and they're happy there.
Friends of ours paid $700,000 for a REO property 12/09. It's in a crappy location within the tract and was in really rough shape both inside and out; no appliances, no landscaping, everything low end builder grade, holes in walls, etc. While I don't know how much, they've sunk a ton of money into the place.
The exact same floorplan but HGTV ready both inside and out; hardwood floors, granite countertops, high end ss appliances, pool, spa, built in bar-b-q etc, etc and on a nicer lot in a much better location within the tract, just sold for $705,000.
Granted the recent equity sale was more than the 2009 REO sale, barely. But our friends, who used to brag about what a great deal they got on their house ad nauseum are now singing the real estate blues ad nauseum.
The thing is, the high end in our location has been taking a slow glide approach to correction. If the lending cartel manages to maintain that, I think both our friends and the folks who just purchased will be trapped in over priced houses for a very long time.
I'm not sure what happens if the slow glide is disrupted and prices plummet the way they have in some other bubble markets. More woe is me stories and calls for even more government intervention perhaps? A little hard for people in places with reasonable prices to feel sorry for anyone who purchased a property for close to 3/4 of a million dollars though... even if it was only a basic tract home. I guess only time will tell.
Money is to be made in any market. I think the best strategy is to hold large investments for a long time and do not expect to get a return in two years.
That said, I have an example of a first time investor that replaced his job income over the last three years by buying fixing, flipping or renting.
First house: Bought $37,800 rented for $800, sold for $85,000
Second house: Bought $62,500, sold for $139,000
Third house: Bought for $60,000, rented for $900 a month
Fourth house: Bought for $59,000, sold for $100,000
Money is to be made in any market. I think the best strategy is to hold large investments for a long time and do not expect to get a return in two years.
That said, I have an example of a first time investor that replaced his job income over the last three years by buying fixing, flipping or renting.
First house: Bought $37,800 rented for $800, sold for $85,000
Second house: Bought $62,500, sold for $139,000
Third house: Bought for $60,000, rented for $900 a month
Fourth house: Bought for $59,000, sold for $100,000
Buy with the end in mind.
Awesome post!
Quoted from an investor:
"A house is like a wife, it is better to keep her than to divorce her"....
he started his business in real estate by renting out his first house after he bought his second, now he has a bunch of properties.
I think if you bought a house thinking as an investor would (buy at an investor price etc.) you would be on a right track in this buyer's market. Don't forget location is very important too.
We got what we felt was a very good foreclosure deal about 3 years ago.
With the money we put into it we would now probably have to sell for just about the cost of purchase plus improvements.
Decreasing area comps have sucked up any profit we might have made if it had been flipped right away.
Prices here seem to be stabilizing enough to 'price to sell' and we didn't buy with resale primarily in mind so would be happy just to not lose the equity
I have bought several, renovated and resold and made good money. I never kept any of them for more than a few months. The longest I ever had one of them was 8 months. The key is in knowinf what to buy. Most REO's won't make you any money.
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