Why you want to SPECIALIZE in a key market or area! Buy, Fix & Flip - DEAL!

[Tyron McDaniel]

Fellow BP family, what's going on! 

Having enjoyed reading all the really COOL diaries many of you have contributed, I had to ensure that I contribute to the dialogue as well with the intent that others will enjoy and perhaps even learn a thing or two! I must say, of ALL the online forums I have been apart of, never have I seen such a vibrant, engaged & value creating community!

That said, I believe in every real estate transaction there are a few gems you can learn and the nugget  I got from this deal was the importance of specializing in a key market or area where you invest or buy property. Not that you should have just (1) area but I believe you want to be an Expert in a given area or target market where you plan on investing. 

For me, I love investing & holding property that's within a 10 minute drive from my home, which in Houston is fairly important as the city covers nearly 650 square miles... YES! Everything is BIGGER in Texas! So investing close to my home is always a BONUS for me.

So not long ago, a local wholesaler sent this home out in his email blast... 

That front looks pretty good RIGHT... not too shabby...

Most people SEE the junk, I see cabinets that are $TAYING!

More junk... but IMAGINE that counter with granite... VISION!

Vaulter or high ceilings are always a BONUS! I'm thinking "Accent Wall"

YES... that's carpet, looking like THAT!

This is the NICE tub, the other one looked so bad we didn't take pics, LOL!

Believe it or not, there is a nice looking house there SOMEWHERE!?!?!

So here are the numbers:
Wholesalers List Price and Numbers: 
Price: $67,000
Repairs: $22,000
ARV: $112k

* Most wholesalers drastically OVERSTATE the ARV and UNDERESTIMATE the repairs, however these numbers came from a reputable, seasoned wholesaler so I knew his numbers were fairly SOLID!

** But I also knew that the market for that area is very TIGHT for buyers as there is little to NO INVENTORY and the few homes that are on the market are either distressed sellers or seasoned sellers who have been in their homes for some time and they will want TOP DOLLAR but they can't get it because their homes aren't UPDATED the right way!

So I knew (or felt STRONGLY) that we could get at least $10k more for this home the way we were going to rehab the property! So here is where we ended up...

Our Purchase Price: $68,000
(Cash using our IRA)

Estimated Repairs $19,000

Estimated Sales Price: $124,900
Worst Case Scenario Sales Price: $119,500
Ultimate Worst Case Scenario: Lease for $1350 and sell to Retail Investor.
Estimated Profits: $32,000 or so

Those are the basics, let me know what you guys think thus far and whether or not you would have done this deal!