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Property Investment Update
Property Investment Update: House #2 and #3
Just wanted to give you a property investment update on the status of house #2 and house #3. As you might know I am selling investment property that I have purchased from the banks, have done total renovations on them and I am now trying to sell. Otherwise known as house flipping.
Property Investment Update: House #2
This one is not doing too well, not too bad either IMHO. First, I have gotten very good feedback on the house itself. It shows very well, everyone likes it and has positive comments on how great a condition it is in. And I have gotten a lot of traffic to the house. So both rehab and marketing has worked well. Now the reality…
I am getting pummeled by foreclosures in the area!
My asking price for the house is $110,000 but there are foreclosures in the area (a lot) selling for $60-80,000. Some of them are almost exact floor plan and others are actually bigger floor plans. Now, these properties are nowhere near as great condition as mine but they are not falling apart either. It seems buyers are really price minded and are not looking at cost of ownership over time but what they have to pay now.
We managed to get an offer on this house but it was looooow… Now, the way this market is going I might consider a similar offer in the future but not right now. I counter offered to what I thought was a reasonable discount but the buyer did not accept it and walked away.
So, after about 90 days on market I decided to make some changes to see if I can get this house sold. First, I am switching listing agents. My intent here is to get a different marketing approach and strategy. Second, we lowered the price - no surprise there. Although I believe the previous price was still a good deal, both the area and the market leave me no choice. By lowering the price to under the $100,000 mark my intent is to be seen by a whole new market, get them to look at the house and hopefully be “wowed” by all they would be getting at this price point in comparison to nearby properties.
I have collected my shares of lessons learned from this property investment opportunity. In all honesty some of the lessons I could have avoided but the biggest ones have really been unforeseen. I will share those on another post on property investing.
Property Investment Update: House #3
On a more positive note…
This one has been on the market just short of 30 days and we just got an offer on it yesterday! It was a pretty good offer, not at asking price, but not lowball either. I was obviously not expecting full asking price but it came a bit lower than expected. My asking price was $135,000.
Now, in this current lending market any offer has to be taken with a grain of salt because there are many hurdles that still need to be cleared when selling investment property. Among them:
- Property needs to appraise for loan amount
- Needs to pass buyers inspection (not worried about this because I know we corrected everything that was wrong with the house when I purchased it)
- Mortgage underwriter needs to agree with appraisal and approve loan
- Buyer must not get cold feet and basically find and excuse to back out of the deal
and many more…
But, having said that the buyer for this contract seems to be well qualified since he asked to close in two weeks, which is very unusual (typical closing dates are 30 days +) and seemed to had already been approved for a loan on another property but that deal did not complete. This gives me cautious optimism that this should work out.
Other than that the property has gotten a lot of traffic from the moment it hit the market. Also, had a lot of positive feedback on the quality of renovation and how well the house showed. So that is encouraging news that the renovation work was done well and that contrary to house #2 this was a significantly better area for selling investment property.
The funny part about it is that house #2 and #3 are about 5
miles apart…but in completely different markets. Take that lesson with you – real estate markets are extremely localized.
I’ll keep you updated on how my house flipping journey proceeds on my next property investment update...
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