We are in a difficult economy and I am going to tell you how my 81 year old dad sold 2 houses in 12 months in this difficult real estate market. He has a third that is soon to go under contract. My dad was a retired builder and building inspector who decided to come out of retirement. He was 80. Here was his strategy:
- 1. Purchase foreclosed distressed two to three family homes at the best deal possible by offering cash. He purchased these homes on his home equity line of credit.
- 2. Fix up the homes with all new appliances and remodel them.
- 3. Purchase construction materials for cheapest price or during close out sales.
- 4. Hire contractors at the lowest price, which was relatively easy to do in a recession.
- 5. He purchased the homes in Danbury, Connecticut in areas that were middle to lower middle class to low income areas. He liked Danbury because the job market is strong in the town because of many hospitals and corporate headquarters.
- 6. His goal was to buy the houses, fix them up and put them back on the market and keep the cost just below market value. The buyer will get a deal and have a newly remodeled multi-family income producing home.
- 7. While the home was on the market he rented out the properties so that they not only paid for themselves, but also produced income.
In this distressed market, multi-family homes appealed to individuals. What dad offered was a win/win for them. He sold two, and has another home soon to go under contract. He also has a condo that he purchased and is now renting for a profit. He has buyers in line for it, but he is going to hold onto the condo and continue to rent it.
He collected all of his rents and has in his third multi-family a person renting with an option to buy. We rented the condo on Craigslist literally minutes after the ad appeared to a young business man who a major company brought into Danbury. People have made dad offers on that property.
My dad's niche is multi-family or other income producing properties in middle to lower income areas. The owner can rent out a portion to help them pay the rent. He also sells these renovated homes at market or just below market value. While his profit on his homes varied, it is greater than any of his other investments and has been as high as 30%.
Family members disagreed with my dad taking on this venture at the age of 80. They treated him like he was a crazy old man because of his strategy. They told him that he would never collect his rent from any of the people who rented, let alone sell any of the homes. Were they wrong. Dad's approach, which seemed foolish to these family members became a formula for success.