Property Source Pros is NorthEast Georgia's Premier Real Estate Resource from Atlanta, GA to Greenville, SC

Flip This House - Hartwell

I actually wrote this story last October and never posted it, but these same clients just put their third flip house under contract yesterday, so I wanted to go ahead and re-lease this story to lead into the next 2 which I will be posting about them over the next few days:

My clients, Halmour Properties - a mother / brother / son combo, recently had a successful house flip.  I wanted to share their story for all of those who think there is no longer money to be made in today's market!

Purchase:  I searched for houses for them for approximately 60 days prior to finding the perfect house for their flip.  It is very important in today's market to look for a house which can be renovated and sold for a profit at the average sales price for your area.  In Hartwell, right now, the houses selling are not the higher priced Lake Homes, but those homes in the $80-90,000 range.   Halmour was looking for a house that could be purchased and renovated for less than $60,000.

We looked at the house on September 6th.  It was a 3 bedroom / 1 bath brick home on .65 acres of land directly across the street from the Hart County Middle School.  It was in very good structural condition, but there was no HVAC, the hot water heater and appliances were missing, it was dirty, the yard was overgrown, the carpets were horrid, and the paint colors were extreme (hot pink, dark hot pink, dark brown, deep bright yellow).  It was listed at $55,500, and had been on the market for six months.  They made an offer to the bank of $38,500 - which was accepted.  The property closed on October 7th.

Renovations:  To their amazement and good fortune, the investors found many special touches which had been hidden.  For instance, they found hard wood floors in great shape beneath all of the nasty carpets, and well-done rock work around all of the landscaped areas beneath the long-ingored plant life gone wild.  They were able to use these items to their advantage.  They had planned significant changes to the home such as: adding a second bathroom,removing the wall between the kitchen and living room area to open it up, adding on to the back deck, and installing a kitchen bar area. But it turned out the most extreme changes they had to make involved removal of the in-the-wall heaters and repair of the remaining holes after installation of a central heat and air system.  Their repairs totalled $7,100.

Sell:  The reason they didn't end up making significant changes was: I put it under contract on October 10th to a family who requested they make only the most necessary repairs and sell it to them. The family has a daughter who had just started middle school.  They took one look at the property, and put it under contract.  They wanted to keep their total payments in the $525 per month range.  It closed on October 31st for $72,750.  Their monthly payments, including escrows for taxes and insurance, total $533 per month.

Halmour agreed to the contract because they knew they could have made the changes and sold the home in the $90,000 range, but it would have cost them that much more to make the changes.  As it worked out, they were able to spend the least amount of time and still create a good profit while feeling proud of the home they sold.

Bottom Line:

Purchase Price = $38,500; Repairs / Commissions = $7,100.  Total Investment = $45,600.

Sales Price = $72,750.  Total Profit = $27,150.  Total time to flip = 24 days. 

What they Learned:  They said what they learned mostly was the order in which to make repairs!  Also, to keep a running board with the day's tasks listed to be checked off.  Apparently the two investors re-did a lot of work because they were not communicating well.  For instance, one prepped the bathtub for refinishing, then the other came the next day and scrubbed it - requiring another prep of the tub before refinishing.  One prepared the trailer for a dumpster run, the other came in and filled it with brush from the yard clean-up.   They both cleaned the windows; they both cleaned the ceiling fans; they both mopped the same floor and forgot about another, etc. 

As their agent, I was very proud their flip worked as well as I told them it should.  Another option for investments in this price range is to rent it for a couple of years before selling it during the next strong seller's market.  I also do property management and leasing, so I had prepared them for this option.  In this instance, they did not have to wait.  We are currently looking at two other homes which they hope to rent and / or sell in this same manner. 

Are you interested in making a 60% profit in a month's time?  Call Julie Haley today . . . I will set you up and we will work to make your goals!

How Are You? What Does Your Answer Say About Your Attitude?

"How are you?"

A question we all ask dozens of times each day.  For me, it had become such a conversation opener, sometimes it was posed as a rhetorical question.  I always want someone to say, "Great; Couldn't be better!", and then we can move on to the real conversation.  Partly because I always want everyone to be "Great!" when around me, and partly because I really don't expect anyone to sit down and tell me all of the worrisome items spinning around in their head simply because I asked!

Over the past two years, the answer I wanted has largely not been the answer I received.  Everyone would answer the question instead with worries about the economy.  "Business has been so bad."; "I'm not sure we're going to make it much longer."; "Julie - You've got to get my property sold or I just don't know what we're going to do."; etc.  Your basic nightmare answers to the "How are you" question.

I care more about people's feelings than I should (a little fault of mine), and for a few months - it made me sad.  Then, for a while, I convinced myself it was refreshing to have people answering the question honestly rather than leaving anything to the imagination.  Plus, the recession did seem to bring everyone in our Country together in a sense.  Everyone was struggling, so everyone actually worried about other people's concerns - if for no other reason than they were a reflection of their own.

However, recently, when I receive that answer it makes me think that person is stuck in a rut and not working very hard to get out of it.  I know, that sounds horrible - even to myself, but we the people of the US seem in general to be trying hard to pull ourselves up, think outside our comfort zones, and make the current environment work for us . . . which is, in my opinion, the American way.  

Many of us spent the last 12-18 months lamenting and comforting our fellow man, which is good, because maybe now everyone understands that each of our individual success is dependant upon our neighbor's success as well.  For instance, if you own a retail business, you understand what happens to business when 20% of your customers become unemployed and the others have to start counting pennies.  Now, you want ALL people in your community to triumph over hard times, because their achievements will result in increased business in your store, thus guaranteeing your own success.

Before the "recession", how many of those same business owners didn't spend time worrying about the few people they passed who were down on their luck?  How many looked at that person and thought, "You just aren't trying hard enough.  If you feel so bad, quit whining and go out and make it happen for yourself."   Afterwards, everyone gained a greater understanding of how difficult things can be when the world seems to keep knocking you down no matter how hard you try; perhaps because they were getting knocked down personally, or so many of their hard-working neighbors were that they came to realize we are all joined together to form this Union and it works best if we all concentrate on making it a better place For Us ALL.

I have always believed a big portion of success is thinking positively.  When one thinks negatively, speaks of negative things, and everyone they talk to has negative things to say, the negative energy works to tire them out, steal their hope, and prevent them from trying to work to make things better.  Eventually, that person can forget entirely how to be "Great!"

On the other hand, when you ask someone how they are doing and they exude positive energy right away, it makes you feel good too (or, at least makes you jealous enough to work a bit harder to steal some of their thunder!).  Regardless of the motivation - positive answers provide inspiration! 

Am I saying, if we all collectively began faking enthusiasm and hide our negative feelings that the ills of the world would suddenly be fixed?  No.  I may be an idealist, but I am not completely out to lunch!  However, . . . the eternal optimist in me thinks it would definitely help our collective psychology to spend more time concentrating and sharing the positives in our daily lives.  And, winning the mind is the hardest portion of the battle.

The real estate market has been moving.  More of my retail and restaurant clients & tenants see business picking up.  The Dow is up.  Unemployment levels are down.  Fewer houses are actually going  to foreclosure.  Even the Government's bail outs are starting to help real people (aka: Main Street) and not just the uber rich insurance company CEOs and banks. 

Obviously many of us are trying to turn that frown upside down and find the silver lining in the clouds.  The answer to the "How are you?" question is finally tipping back towards "Doin' Well".  But, not everyone has gotten on board yet.  Don't we all agree that now it is time for us ALL to step up and work to change the way we see the world, thus the changing answers we've been giving and receiving to the "How Are You?" question - if only for the spirit of positive reinforcement?

By The Way: All of this craziness has produced the most opportunistic market I've ever seen.  Now is still a great time to buy!  Call me today; let's talk about all of the great things happening in Northeast Georgia!

MSNBC.Com boasts: New Home Sales See Biggest Jump in 47 Years!

Alan Zibel of MSNBC.com recently posted this, and I thought it was interesting:

Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as government incentives and better weather boosted sales.

The Commerce Department said Friday that new-home sales rose in March to a seasonally adjusted annual sales pace of 411,000.  It was the strongest month since last July and the biggest monthly increase in 47 years.

The median sales price was $214,000, up more than 4 percent from a year earlier, but down more than 3 percent from February.

The new-homes sales report reflects signed contracts to purchase homes rather than completed sales and thus gives economists a feel for how many buyers were out shopping for new homes in a given month.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire today.  The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of the week and must complete the transaction by the end of June.

"Everyone's just trying to sign on the dotted line," said Jennifer Lee, an economists with BMO Capital Markets. 

Nearly 1.8 million households have used the credit at a cost of $12.6 billion, according to the Internal Revenue Service.

"These robust numbers say the credit is working," said David Crowe, chief economist at the National Association of Home Builders.  He forecasts sales will rise through April, weaken modestly, and then remain stable through the rest of the year.

The rise in a new-home sales was seen nationwide.  Sales grew a whopping 44 percent in the South and 36 percent in the Northeast.  They also rose about 6 percent in the West and 3 percent in the Midwest.

The number of new homes up for sale in March fell 2 percent to 228,000.  At the current sales pace, it would take nearly 7 months to exhaust that supply.

Still, new-home sales are down 70 percent from the peak in July 2005, and some analysts predict they will sink back to the winter's dismal levels after the tax credit runs out.

"I expect we'll see a very sharp drop back," possibly to new record lows, said Paul Ashworth, Senior U.S. economist with Capital Economics.

- So, I want to talk about what all of this means:  First of all, on a personal basis, I have contracted with several first time home buyers this month, so I agree that the credit was helping tremendously, but I've also contracted with several people buying lake homes.  It seems that overall, people are beginning to have more faith in the economy again.  We have a few manufacturing plants in Hartwell and the surrounding areas which are also hiring large numbers of people this spring, which is helping with middle range home purchases and greatly assisting with my leasing services.    Now that the home buyer's credit is disappearing, I do expect to see some of the lower end home sales go more slowly (durnnit!), but I don't think sales will die off completely as some predict, since many of the spring sales are still relocation or recreational second home directed and not first time home buyer driven.  Not to mention, your real estate buying dollar still goes a longer way right now and interest rates are still great!

One thing I look forward to seeing is how the government is now going to produce a resurgence in commercial and investment purchases.  I have many great income producing investment properties listed, but they unfortunately are selling slowly right now because lenders have not yet loosened up on commercial lending.  Right now, most buyers have to put down almost 40% to buy investment properties and then the interest rates are not super.  That being said, these investment properties are priced at very affordable rates - the days of 8% CAP rates are long gone for Sellers, and we're seeing more 12%+ CAP rates.  The good news is leasing has been strong both commercially and residentially, so there are more investment properties actually producing income now.  We may have to see a surge in Seller Financing to move these properties before the commercial property ladder begins climbing again. 

Some of my clients and I have been doing lease-purchases with our properties to move them.  It is complicated, takes an agent who knows what she is doing to set up correctly, a seller who is in a position to "be the bank" for a little while, and everyone has to wait to finally get to closing, but in general I'll take a good sized downpayment and then allow the Buyer to pay over the next year with a good portion of the "rent" going towards their earnest money - thus helping them get to the required downpayment over a year's time.  So far, I've only had it fail once, but the client still made over $18k on the venture and still has the property to sell, thus no one considered it a "failure"! 

    If it is something you think may work for you, call me today and let's discuss how to get you in the game.  Hopefully lenders will wake up in the mean-time and get back on board with some investment lending options.  No One wants the banks to fall back into old habits which have gotten them into trouble, but the trouble-causing habits were lending more than the property was worth to people who weren't qualified rather than simply lending money on investment properties.  If you have an investor with 15 to 20% to put down, good credit, and is buying the property at a good price, that's a good risk in my opinion! 

In the meantime, we just keep on working.  It is the American way: when times get tough, we roll up our shirt sleeves and work to figure out how to convert things to our favor!  At least things have been interesting through all of this; I've gotten a good bit of practice thinking outside the box.  Give me a call if you are ready for someone who can help you find interesting ways to work towards the sell of your property, and let's see what we can make happen together!