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Another Bad Rehab: Not A Good Idea

By
Real Estate Agent with Ad Astra Realty BR00222587

bad swimsuitSome things just don't work in life.  Take Borat's swimsuit.  It's not that he's an ugly man.  But it just doesn't work.  Another thing that doesn't work is an overpriced rehab house where the rehab work was done badly.  Especially in this market.

I walked into a house today to review with a client.  There had been a 16.2% reduciton of price yesterday and that caught my attention.  I had seen the house before a few months back but couldn't remember what I didn't like about it.

Here is a list of what's wrong;

  • Sloping floors.
  • Sloping ceilings.
  • No appliances.
  • Carpet installed poorly...and I mean poorly.
  • Mis-fitting wood trim.
  • Loose vinyl siding.
  • A chimney that will fall down within the next 5 years...guaranteed.
  • Poor paint job.

Now there were some things right.  The carpet did look newer along with the newer windows.  But never-the-less it just won't fly.  It's small, badly done and overpriced...still.

I've said it a thousand times and I'm going to say it again now.  Buying, rehabbing and selling is not easy.  You need to buy at the right price, hire the right guys for the repairs and sell at or BELOW market value for a quick turn. 

By talking to the agent I learned that this was the first rehab for this seller, that they are behind on their hard money loan and that the price now is down to where he gets the payoff amount and real estate fees.  And sadly, that probably won't happen.

Make sure you do your homework when you are looking at real estate speculating.  Otherwise you'll be the next 16.2% price reduction waiting on a miracle. 

Comments (7)

Colorado Springs Real Estate
Colorado Springs, CO
My name a Bor-At. HA HA. I see a lot of bad craftsmenship in fix and flips. Its just makes it that much harder to sell.
Sep 14, 2007 05:29 AM
Chris Lengquist
Ad Astra Realty - Olathe, KS
Kansas City Real Estate Investing

Dan - Pamela would be happy not with domicile.

Carolyn - What bothers me more than not doing a physical inspection is not doing due diligence on the financials.  It drives me crazy.

Sep 14, 2007 05:47 AM
Midori Miller
Talk 2 Midori, LLC - Daytona Beach, FL
Online Marketing For Real Estate Professionals

Chris-Its pretty bad here we are such a huge investment and 2nd home and vacation home area!  Great advice

In Volusia County I heard there were 1000 less kids enrolled here and that enrollment was now 11%, they also had to let teacher go.    

Sep 14, 2007 01:44 PM
Fran White
North Kansas City Real Estate, Reece and Nichols Residential - Kansas City North, MO
Kansas City North Real Estate, 816-682-3897

Wise advise from one who knows!!   I went into one this evening that had been re-habbed.. O M G....

To say the least it was bad and the price wasn't right!

Sep 14, 2007 02:37 PM
Gary Bolen
McCall Realty - South Lake Tahoe, CA
CRS - Lake Tahoe Real Estate Information

Chris, always hate to hear that someone is going to be upside down, especially if it really hurts them. Borat, though, should be ashamed of himself. Is that from his film? If so, we couldn't get far enough into it for him to make it past texas...

cheers 

Sep 15, 2007 03:14 PM
Ethan Dozeman
Realty Executives Platinum Group - Grand Rapids, MI
Real Estate in Grand Rapids
I am looking at doing some flips in Grand Rapids, it is all in buying them right, we want to offer 70% of fixed up value just keep making offers until we get them...
Sep 16, 2007 12:25 PM
Chris Lengquist
Ad Astra Realty - Olathe, KS
Kansas City Real Estate Investing

Midori - the teacher go the double whammy.  First it's too expensive for her to buy, realistically.  Then she loses her job because others can no longer afford to live in the community.  Do your prices seem out of whack?

Fran - sadly it's more common than not.

Gary - not a Borat fan, huh? 

Ethan - my formula is not 70% MINUS repairs.  Just FYI.

Sep 17, 2007 03:09 AM