Yesterday, my real estate attorney told me that a lot of his other investor clients are buying distressed properties, but only doing the demolition before selling to other investors. In our market, they might spend $15k taking it down to the studs and treating with Killz, then marking it up an additional $60k before selling the shell of a house. Much better profit than wholesaling, but not near as much time, work, and expense as a full rehab.
Do any of you have experience with such a deal? I live in Anchorage, Alaska. The median home price is around $275-280k, but materials and labor for rehabs are much higher than "normal" (a good price on a shower install is $4,500-5,000 and it can cost up to $1,000 for a simple window install).
I kind of feel like if I'm going to raise the money to buy the property in the first place and go to the trouble of taking title, I might as well just do the whole project. On the other hand, the time savings may make it worthwhile. Any thought?
Angus Pratt, Reliant Real Estate Solutions
