http://www.investinhouston.net/blog/2016/4/27/houston-tx-success-story
I wanted to share a success story an investor experienced by utilizing some of the services that we have to offer here at New Western. The services included providing the subject property as well as financing, and our flat fee listing service. This house is located in southwest Houston in an area that has much more potential to provide many more successful projects. In fact we have another investor who is currently working on another house a few blocks over and is sure to provide another great success story. Below are some details on the property.
- Square Feet: 2,125
- Beds: 3
- Baths: 2
- Garage: 2
- Year Built: 1966
When providing this property to my investors I will include a comparative market analysis (CMA) of the rehabbed comps in the area. The CMA in the area was producing a $230k ARV. In order to get the subject property to a price point of $230k the estimated rehab was $25k. There was also believed to be some speculation the house might be worth more if a little more was spent on the rehab since some comps suggested these promising numbers. The investor visited the property and walked through it and was able to make a decision on the spot that this deal provided the margins that they were after. After the contractor visited the property the investor decided that a little larger rehab budget was justified for a higher ARV. Below are the final numbers on the project.
- Purchase Price: $159,000
- Rehab: $36,000
- Sold Price: $255,000
- Days on Market: 14
Looking at the numbers above this provides a spread of $60,000!! I am sure any investor would be happy with numbers like this. As I said they did use our in house hard money financing provided by Sherman Bridge Lending. Their total out of pocket for this project including hold costs on the loan was $79,210 and they stand to walk away with $34,473. This provides an astonishing 44% return on investment (ROI).
Included in the profit was the savings of the flat fee listing service. For a flat fee of $575 this property was placed onto the MLS here in Houston. This same flat fee service places the proeprty on most if not all of the major online real estate websites. With the flat fee the investor may opt into the scheduling service to allow their phone not to be ringing off the hook when potential buyers come along. The buyers agent will schedule the showing times with the scheduling service and the investor may ask the service to provide feedback from the buyers. The flat fee eliminated the typical 3% listing fee and netted $7,075 in their pocket.
As you may well know an all cash purchase would have generated more profit but the ROI would have not come close to 44%. Entering this much money into a stock market is risky on a good day. With whats going on in the stock market now, I would say its close to impossible to make 44% returns in the same time frame it took this investor from close to close of 3.5 months.
http://www.investinhouston.net/blog/2016/4/27/hous...
