Volume Rehabbers

[Justin S.]

Has anyone employed the volume rehabbing business model versus the standard 70% minus repairs business model?

The following pertains to properties under 100K:

In my market area, lots of properties are moving via auctions, wholesalers, REO's, etc but not at your typical 70% minus repairs but closer to 80%. I have spoken with several investors who have told me they look to make around 10% of sale price per house. The repairs they perform are mostly cosmetic (carpet and paint) and on newer homes (built between 1995-2005).

To keep margins down, investors have:
1. Made deal with agents to list at 4.5% (1.5% for listing and 3% for buyer)
2. Have bought material in bulk and stored in warehouse.
3. Passed as many closing costs onto the buyers

I understand this is not your traditional method, but they appear to moving property very quickly. Rehabs take less than week and properties are closed in about 45 days.

Has anyone had success doing this and if so can you share lessons learned?

Thanks

[J Scott]

In my area, the bulk of the buyers are FHA, so working on pure volume doesn't work as well as it might look on paper. With the 90-day FHA resale rule, even if we had the property turned and relisted within a couple days, most of our buyers wouldn't be able to make an offer for another three months anyway.

That said, now that FHA is lifting their 90-day rule come Feb 1, we'll definitely start increasing volume and picking up properties that need less work.