I NEED FEEDBACK ON AN EXPANSION PLAN I AM USING

[Jerry W.]

I have been investing in real estate as a side thing for well over 30 years and have had many different strategies.  Often it was just buying then reselling my own home.  I am over 30 units now, but have slowed down my buying considerably for several reasons.  1.) Real estate had gone up a fair bit and frankly finding cash flow was tough.  2.) After refinancing the portfolio to buy out a partner cash flow was down a fair bit.  3.)  A year after I bought out my partner the energy price crash really hurt my local economy.  

I have a bad habit of buying properties and taking years to fix them up.  this is partially because when I had a partner I was in charge of finding and financing deals and he was a long time contractor who was in charge of fixing them up.

I currently have just finished the second half of a duplex that I have owned for a year and a half.  It is a vacation rental so income will be negative until next spring.  I also have a property 55 miles away that I have owned for 2 years that is about 90% ready for a renter.  It has been listed for sale for about 5 months just in case a I could get a buyer to save me some rehab.  I bought it very cheap, but have maybe $20K to $25K in renovations and holding costs.  A third property I have owned for well over 3 years, again bought cheap.  I had a deal with a contractor that fell through where i bought it, paid for materials and holding costs and he did the work and we split the profit.  It has a large garage I use for storage, but still keep the house heated.  It is 32 miles away.

My last fixer upper is a double wide that has been owned by another business I am in for 10 years or more.  It had problems and got some water and snow damage and has been empty for 3 years with various contractors doing a little work and then moving on.  In the last 2 months I have spent over $10K on it and will have at least another $16K into it before it is ready to sell.  I expect it will be ready to sale in 2 to 5 months based upon current progress.

Here is the problem.  I have had several decent deals come up.  (Not a common occurrence) I will refinance the duplex and pay my line of credit down to about $15K, leaving me $85K to pay as 20% down on new purchases and finance more renovations on those purchases.

Should I stop buying and concentrate on fixing up what I have, or buy these good deals and hold them until next year when I can work on them? One deal will cost about $93K and has an ARV of at least $160K. It has a 1700 square foot rental on top and a 1500 sq foot rental on the bottom. Needs sewer line replaced and water and boiler lines replaced. It has been frozen, so there will be a lot of pipe repairs. The combined cost could be as much as $20K, but that is high. Fixing up the interior should be around $5K to $7K for carpet and paint, and cleaning. It is in pretty good shape. It should rent for at least $700 on the top and $600 on the bottom. It is a foreclosure.

The second deal is a quarter of a block.  It has an OK 16 foot wide trailer, a low quality 1959 double wide trailer, a decent 800 foot garage, and a 750 square foot house that desperately needs burned or torn down.

I could have the newer trailer fixed up enough to rent for under $5K, and get $500 per month.  The double wide would able to be ready in 2 months and rent for maybe $450, and would need about $7K in renovations.  I am sure I can buy it for $50K.  The junk around the house will cost at least $2K just to haul off.  The tear down and haul away on the house will be about $12K.  

This used to be a nasty neighborhood, but the bad element recently died, had a fire and others sold and left.  I believe the neighborhood is turning now.  The land alone with nothing on it is worth over $50K, it is hard to value trailer houses, maybe $20K between them.  The local assessor has the value of everything at about $115K, I put it at $70K, but it will cash flow better than most due to the trailer houses.

So buy the deals and have them to work on later, or finish my current projects until they are done then look for deals?

I am possibly a little anxious to buy as my last deal I bought this spring I flipped and resold it for a $32K profit in under 4 months.  Neither of these properties will do that.  I had my wife, my handyman, and a realtor tell me I shouldn't buy the property, but fix my other ones instead.  My wife said I was just lucky when I made the $32K profit.