Development Tactics

Generally speaking, these sales require some foot work to go and look at the properties to determine if you even want to bid on them. Basically, our numbers are running about 50K-60K to rehab a 3 bedroom 2 story home and 70K- 80K to rehab a 3 story. These numbers are for a single family rehab intended for resale. Properties being renovated and converted into multi-units run a little higher. 

For example, a 3 story single family can be converted into a third story duplex for a slightly higher cost.

I am currently completing these types of properties for about 85K-100K. The rule of thumb I use for these types of investments are the neighborhood value which I get from doing a comparative market analysis (looking at what has recently sold in the area) I usually only advise clients to purchase properties that are low in acquisition cost and have mid range renovation cost. This way the equity in leaves run for a return after resale or the rental income can easily carry the mortgage or line of credit note.

For example: If the areas comparative market analysis equals 150K

Acquisition = <30k

Renovation = <80k

Total Cost In = <110k

Equity spread after resale = 30K-40K after all cost and fees.

Of course a total management system of design, permitting  building and supervision is required to reach these goals, all of which is what EAGA does. And of course the market has much to do with how long the property will remain on the market and what the end carrying cost will be if the intent is to resell. Our solution to this is an aggressive marketing strategy as well as aggressively seeking out first time home buyers. The ideal situation is to have buyer already on-board who is willing and able to wait for the renovation to be completed. This is all but easier said then done, but if you have patience and a sound understanding of the market your in the clientele your targeting and are willing to persevere it is and can be a very lucrative venture. Cash and credit is the place to start.