Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Rehabbing Your Way To Millions

In just about any real estate market I believe that there are a lot of great ways to make a fortune in real estate and one of those ways is to rehab and sell properties quickly. This is a strategy I implement on a daily basis in my own Real Estate Investing business.

There are some excellent resources for you to use to find vacant, ugly properties to rehab and sell in virtually any price range. One of those ways is to simply use targeted direct mail campaigns like I do to find motivated sellers of ugly vacant properties or estates.

This is a great way to find highly motivated sellers who need to sell quickly and there are great deals to be made for pennies on the dollar. Remember, your profit is made when you buy a property. 

Another strategy I use to find the owner of vacant ugly properties is to mail to a list of properties with delinquent taxes that belong to out of county or out of state owners. These lists are pretty easy to come by and I offer resources for these mailing lists and others when you invest in my Marketing System.

Another way to find great deals with ugly, vacant properties is to work with the REO departments of your local banks. REO means real estate owned properties. These are ugly, vacant properties that the banks have taken back for non-payment of the mortgage.

These banks are generally selling properties for forty to sixty cents on the dollar in order to get rid of them quickly. Generally speaking the banks want to get these ugly houses out of their inventory since banks are in the money business, not the house business. And there are more houses available through these resources than ever before due to our current real estate market situation.

You do need to be careful about the properties you are buying since you want to buy houses you can resell quickly, so there are some specific parameters I would suggest you follow. Here are examples of houses I would suggest you stay away from buying.

  1. Houses on busy streets
  2. Houses in war zones
  3. Houses with only two bedrooms or tiny bedrooms
  4. Houses needing more rehab than you can handle (like burn-outs)
  5. Houses which are functionally obsolete
  6. Houses on postage stamp lots
  7. Houses near or across from commercial areas
  8. Houses near or across from businesses or schools

The whole idea is to find houses you can rehab quickly and sell at

or just under full retail in order to sell them quickly, so you need to make sure the numbers work in order for you to get the profit you are looking for from the deal.

There are also specific things you want to do to make your house stand out from all the others in the same price range in order to get your house sold quickly; like really making kitchens and baths stand out, and adding inexpensive upgrades that homes in the same price wouldn’t normally have.

Some of these upgrades might include nicer hardware like faucets and showerheads, tile in the showers, nicer kitchen appliances, etc. Also make sure your house looks clean and attractive from the exterior. There are lots of inexpensive ways to accomplish this. These strategies will make your house stand out to the potential buyer and get it sold much more quickly.

For more information on finding motivated sellers for your real estate business and getting your houses sold quickly for more cash, make sure you visit Kathy Kennebrook’s website at www.marketingmagiclady.com.

Kathy KennebrookKathy Kennebrook is a speaker, author and has been actively investing in real estate since 1999, Kathy currently resides in Bradenton, FL and is known as the “Marketing Magic Lady” because she is the country’s leading real estate marketing expert on finding motivated sellers using direct mail.

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Real Estate IRAs – Special Considerations for Vacant Properties

We are seeing more interest among real estate IRA enthusiasts in purchasing distressed and vacant properties. Many times, the real estate IRA investor can purchase a promising vacant property at a substantial discount to its intrinsic value, which make these properties attractive value investments – especially for those real estate IRA investors who have the capital to upgrade these properties and make them once again attractive to tenants at a reasonable rent.

But as long as a property is vacant, there are some special considerations that investors need to consider: 

  • Vacant properties are susceptible to vandalism
  • They are attractive nuisances to children.
  • They may attract vagrants
  • Vacant properties are sometimes occupied by squatters
  • If a child, vagrant or squatter is injured on the property, you (or your real estate IRA) could be held legally liable for the injury.
  • Leaks, mold and other problems can go unobserved for weeks or months – making repairs much more expensive than they would be had a tenant been there to help you nip it in the bud.
  • Vacant properties are more vulnerable to burglary and theft

Naturally, you’ll want to carry insurance on your real estate IRA investment – normally the standard landlord insurance policy for a property of similar size, type, value and number of units works fine.

But these standard insurance policies are not designed to cover the additional risks posed by a wholly vacant property. They are generally priced with your locality’s typical vacancy rates in mind. If your property has been vacant for more than a few months, and you have a claim, and your insurer finds out, they have grounds not to pay the claim.

That’s why insurance experts recommend owners of vacant properties purchase specialized vacant property coverage. You can buy this as a stand-alone policy, but it’s more commonly sold as a rider or additional feature or benefit of a standard landlords’ insurance policy.

The premiums are slightly higher than you would normally see on an off-the-shelf landlords’ policy, at any given deductible and coinsurance level. But the coverage is probably worth it, as it helps to plug a hole in your insurance protection plan that could result in devastating liability.

Note that just because your investment property is unoccupied doesn’t mean that it’s a vacant property for insurance purposes. The law expects and anticipates that landlords will have occasional vacancies of a few days or weeks between tenants, and during repairs and upgrades.

Many carriers will let you choose between a 3 month, 6-month or 12-month policy term. The best term for you probably reflects the length of time you may need to complete a repair or upgrade.

Premises liability coverage is usually optional, but is often a good idea because liability may be one of the biggest hazards to your IRA.

If you are doing upgrades or repairs, you may also consider purchasing builders risk insurance, which protects construction material and the value of those repairs and upgrades.

Jim HittJim Hitt is the Chief Executive Officer of American IRA and he has been committed to all aspects of investing for more than 30 years, using self-directed IRAs for his own investments since 1982. Jim’s forte is the financing and acquisition of real estate, private offerings, mortgage lending, business’s, joint ventures, partnerships and limited liability companies using creative techniques.

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