Sunday, April 4, 2010
Investment property change of plan
I am now working on rehabbing an investment property purchased a few months ago. The original plan was to wholesale it to another investor as a rental. It was a conventional sale and the normal realtor 30 days until closing even though I was paying cash. Between contract and closing values in the neighborhood went down and sales in the area slowed to a near stop.
There still seemed to be some hope of scraping out a few dollars for a quick resale but interest was low. Soon other properties in better condition were selling for the same amount as my asking price. There was a lot of realtor interest but the slightly run-down property condition and odd floor plan put conventional buyers off. It was time to adjust the investment strategy.
The major problems with the house were old and ugly switches and receptacles, an improperly installed hung ceiling and ugly dishwasher in the kitchen and older, different-colored paint in every room. Taking care of these problems and painting the exterior trim should cost a few thousand dollars and a few weeks if I do the work myself and should make the house acceptable to a conventional buyer at a price that will leave me with a small profit. This seems like a wiser course of action than insisting on a straight resale and losing money on the deal.
In most if not all of life it pays to be adaptable and open to new ideas. I am certainly using a different strategy for the stock market than just a few years ago. Real estate investing is no different. The market is constantly changing and successful investors pay attention and make the effort to change with it.