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Deep Pricing & Minor Repairs Make for Great Rehabs - 2009-11-01 |
Last week we saw that some 35 percent of home sales during the past year were bank-owned foreclosures or government-owned resales. That is a huge increase from just a few years ago when sales of these homes were not a significant part of the Atlanta market.
Two factors cause these homes to sell at dramatic discounts:
* Lenders and government agencies are charged with disposal of these properties regardless of price. These sellers simply do not have the luxury of waiting until the market improves; and
* These same sellers have a strict policy of selling the properties in "as-is" condition, meaning no repairs and no disclosure statements. The buyer takes all the risk. As a result, the only potential buyers are investors looking for a bargain.
So, what are the specific characteristics investors look for in today's market? There are many, but the main three are:
1. A LOW PRICE
This is the most important part of the equation. The acquisition price needs to be low enough to cover all needed repairs, carrying costs, marketing expenses and still represent a bargain to the end consumer. Whether the investor intends to resell to an owner-occupant, or hopes to rent for long-term appreciation, the price paid for the acquisition is critical to all later profitability.
In the case of Atlanta's post-foreclosure marketplace, investors have found a "market bottom." In other words, almost anything will sell very quickly if it is offered in the $30,000 to $40,000 range. Furthermore, the market is getting hotter.
2. SCOPE OF REPAIRS
While the uninitiated might think that the level of repairs necessary would be the most important consideration of an investor, such is not the case. Instead, price conquers all. Sometimes the best deals require cash for major systems as well as structural repairs.
That being said, every investor hopes to minimize capital outlays for the rehab. Paint and carpet is a must, and updated countertops and lighting fixtures are almost always part of the needed work. Beyond that, the house becomes less attractive. Smart investors are experts at estimating overall repair costs. And finally,
3. NEIGHBORHOOD
Investors always look for pride of ownership in the neighborhood. In other words, is this the kind of area where a typical buyer or renter would want to live once the renovation is complete? If the answer is no, then all other factors become less important.
Graffiti in the community, junk cars littering the yards, "boarded up" or vacant homes are all indications of problems in the neighborhood. Wise investors try to avoid these signs.
The good news is that Atlanta's investor community is working hard to absorb this glut of bank-owned homes. The question no one can answer is when the supply of these homes will begin to decline.
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Upcoming Events
"EPA CERTIFIED RENOVATOR" TRAINING
Do You Work with Real Estate? You Must Be LEAD SAFE CERTIFIED as of April 22nd.
To all owners, realtors, investors, property managers, contractors, electricians, plumbers and painters. Do you ever engage in any level of renovation? If so, read this:
Any renovator, from owners to contractors, from plumbers to electricians to painters, who disturbs lead paint while working in a pre-1978 home, school or day care center, now must be Lead-Safe Certified. If you’re not, you can face tens of thousands of dollars in fines. Plus, you put the health of yourself, your workers and your customers at risk, which could result in lawsuits. One simple 8 hour class certifies you for five years. It’s that easy.
Since April 22, 2010, there are new Federal rules regarding how you perform any work that disturbs lead-based paint in homes, child-care facilities and schools built before 1978. You now must be EPA certified and follow specific work practices to prevent lead contamination.
Failure to follow the new rules can result in federal fines of up to $32,500 per day or up to 5 years in federal prison, or both. Don’t take a chance - it’s not worth it.
How To Become an EPA Certified Renovator:
In just one day, John Adams will teach you how to meet all EPA requirements and become an “EPA Certified Renovator.”
Don’t wait - register now! Click on “Seminars” and choose your day!
- Friday, July 30th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 06th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 13th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 20th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 27th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
Total Course Cost: $295, includes exam and EPA-HUD 400 page manual
Space is limited to 20 participants.
Training services provided by Seagull Environmental Management Co, Inc.
Courses are approved for purposed of certification under Section 402 of TSCA for the Certified Renovator.
This course has been approved by the Georgia Real Estate Commission for 7 hours of Real Estate Continuing Education
For more information, call toll-free 888-373-0029
Click above on the "Seminars" button to register
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John Adams Presents
“The MetroVestAtlanta.com REO Bus Tour”
Get on the bus for a tour of South DeKalb County’s “Real Estate Owned”
homes. Each house you visit will be available that day for purchase at
a giveaway price, regardless of current condition. Financing is
available!
Throughout the day, we will hear from mortgage providers, people in the
construction business and property managers all discussing today’s
situation with Bank Owned REO properties.
Who Should Attend: Investors, Realtors, Lenders, Prospective Buyers, and
anyone who might want to buy a super-bargain house and either do the
rehab themselves or have all the work performed by the pros.
You will see abandoned dumps and finished products, and everything
in between. And Snap will be there to answer all your questions and
explain the rehab and rental strategies.
Saturday, August 21st, 9:30 AM to 4:00 PM
Your $49 fee includes the bus tour and lunch. You must make reservations. No walk-ups.
There is limited seating and the seats are filling fast. ACT NOW before you miss the bus.
We will be meeting at Suburban Plaza, 2643 N. Decatur Road and Church Street, Lower Level, Decatur 30033 (beneath Hancock Fabrics, in the arcade.)
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