The 2018 Goals:
Goal |
Current: |
Variance: |
|---|---|---|
| Redevelop + Resell 6 homes | 0 | -6 |
| Achieve 40%+ Annualized ROI | 0% | -40% |
I will begin my search though the MLS across several counties around me, focusing on a 50 mile radius from my residence. I will search for key value-add signs, such as specific keywords (i.e. TLC, needs repair, seller concessions, sell fast, etc). I am lucky that I have a real estate license. This saves me a great deal of time as I am able to create automated email filters rather quickly. I will go more into the benefits of becoming a licensed real estate agent on an upcoming blog.
I will also track foreclosure sales within these counties (which are mostly done online), to determine if there is sufficient density and relatively low competition to make a profit.
Based on the goal of 6 homes, and today being 4/18/18, I have exactly 257 days left. This gives me approximately 43 days for every house I need to buy. However, when I consider that I also need an average of 4 to 6 months from purchase to market, my deadline shrinks back to end of June, giving me about 2.5 months to locate, rehab and sell all 6 houses. Note that my goal is to complete a total of 6 homes, not just purchase. At an average price of $100K and approximate rehab costs around $50K per house, it will require approximately $900K in cash to pull this off. Luckily, I have partnered up with cash heavy investors who can easily cover the bill, albeit taking 50% of the profits. This is a common arrangement and I will write more about this topic in a blog.
In order to consistently achieve the >40%, I will have to be pretty certain about all the numbers – for every home I decide to purchase. There are four main numbers that could completely derail me from hitting this target. Each number has a direct impact to hitting this target, so attention to each is critical.
- Purchase Price
- Resale Price
- Project Estimates
- Project Schedule
Project #1: Century
The Basics
- Purchase Price: $38,550
- Contract Terms: 1 Day inspection, close cash in 20 days
- Source of Acquisition: MLS
- Risks: Lower income neighborhood, could mean delayed financing.
- Rewards: Solid block home, VERY cheap, decent neighborhood.
- Before Video:
- After Video:
- Status: Rehab
| MEASURE | FORECAST: | ACTUAL: |
|---|---|---|
| Costs (Buying, Holding and Selling Costs): | $13,250 | $14,750 |
| Major Repairs Required: | HVAC, Roof, paint interior and exterior, new deck and replaster poool | All forecasted, plus new chimney. |
| Time to Market (from purchase to resale): | 90 Days | 62 Days |
| Annualized ROI: | 42% | 46% |
| Net Profit: | $26,000 | $32,500 |
Lessons Learned:
Project #2: Pine
The Basics
- Purchase Price: $38,550
- Contract Terms: 1 Day inspection, close cash in 20 days
- Source of Acquisition: MLS
- Risks: Lower income neighborhood, could mean delayed financing.
- Rewards: Solid block home, VERY cheap, decent neighborhood.
- Before Video:
- After Video:
- Status: Rehab
| MEASURE | FORECAST: | ACTUAL: |
|---|---|---|
| Costs (Buying, Holding and Selling Costs): | $13,250 | $14,750 |
| Major Repairs Required: | HVAC, Roof, paint interior and exterior, new deck and replaster poool | All forecasted, plus new chimney. |
| Time to Market (from purchase to resale): | 90 Days | 62 Days |
| Annualized ROI: | 42% | 46% |
| Net Profit: | $26,000 | $32,500 |
Lessons Learned: