When Kim and I were baby real estate investors, we were totally focused on buying our first investment property. Then one day it actually happened! I remember leaving the closing attorney’s office feeling pumped up. When we got in the car, Kim asked, “Now what?”
Now what, indeed! I hadn’t given that part of the equation much thought. This happens to a lot of new real estate investors. So once you buy a house, what do you do next?
To answer this question, let’s look at three properties we worked on recently.
The first is 337 Rail Drive in Adairsville, Georgia. Kim bought this house at the November 2015 foreclosure auction. From the start, it was a flip. In other words, we bought this property to resell quickly. We’re flipping this home because we need to replenish our cash reserves.
Shortly after purchase, Kim had the property trashed out. Because our contractors were tied up rehabbing Akin Drive, she elected to delay doing the extensive repair work Rail Drive needed. Instead, she offered it at a wholesale price, which was well-below market.
In less than a week, Kim found a qualified buyer and accepted her purchase offer. Unfortunately, about a week later, the buyer changed her mind because she was scared about the amount of work the property needed. We refunded her earnest money, hugged, and parted friends.
By this time, the Akin Drive rehab had been completed, so Kim began rehabbing Rail Drive. The project will take two weeks and cost $13,000 to complete. The good news is that we quickly found another buyer for this property, but instead of a wholesale price, it was a full-priced, after-repaired sale.
The point: After getting this home, we immediately put it on the market to sell – first at an as-is price, and then at an after-repaired price. When you buy an investment property, every day that it sits unsold or unrented costs you money – a lot of money! So don’t let grass grow under your feet. Get busy!
The second property we’ll look at is 1040 Euharlee Road. This is a rental property that went vacant. Like I said, vacant houses are scary things. It took about a week to get this property repaired, painted, cleaned, landscaped, and advertised for rent or rent-to-own. Things went as expected, and this beautiful three-bedroom, two-bath home with a fenced back yard was leased in less than two weeks.
The third home is 50 Akin Drive in Cartersville, Georgia. The rehab on this property was extensive; it was a complete gut and rebuild. It cost us more than $40,000 to complete the work - ouch!
Now for the great news: In less than two weeks on the market, this house went under a full-price, all-cash contract, and we closed ten days later.
So there you have it: Three vacant houses we had and what we did to either fill or sell them.
Do you feel the sense of urgency that Kim and I had about these three outstanding homes? To succeed as a real estate investor, you need to have a constant sense of urgency. It’s a sin not to do a full-court press on a house that’s vacant. Bad things happen to vacant homes.
But what if you don’t have the money to pay for the repairs?
Years ago, we got a rental back. It needed a $25,000 rehab. Only one small problem: we were flat dang broke! What would you do in this situation? Our solution to the problem was to bring in a 50-50 partner. This partner put up the needed fix-up funds. In return, he got half of the property’s equity, half of the rents, half of the tax benefits and most importantly, because I agreed to continue managing the tenants, he got none of the landlording headaches. This was a true win-win deal; we each got something we needed and wanted!
Remember: When you buy a house, your job is to get it rehabbed, and then sold or rented ASAP!