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Beginner Nets $50,000 on Two Foreclosures

by Steve Bean in Oregon   

I started educating myself about real estate investing in mid-2000, almost entirely by studying CRE Online. I created a Sub-S corporation in June 2001 and started marketing in the local paper with "We Buy Houses" ads in July. Had a lot of calls and finally settled on two deals.

Each house was near the tail-end of the foreclosure process and I was dealing with the private party doing the foreclosing. After he took title, my company purchased the two houses simultaneously for cash in early October (via my new home-equity line of credit).

House #1: I paid $54,000 in early October, plus invested another $4,000 in rehab work (mostly carpeting, paint and minor repairs). I listed it with Help-U-Sell and sold it to the first person who looked at it. The buyer has qualified through FHA and the loan closes on 12/28. After all my costs, I will net $20,000 pre-tax.

House #2: I paid $60,000, plus invested another $25,000 in rehab work. This was my first true rehab and caused me to lose much sleep. By the end of the rehab (which took about two months), I had replaced the roof, refinished 900 square feet of oak flooring, replaced out aluminum windows for vinyl, installed new interior doors, casing, molding, fixtures, vinyl floors, counter tops, drywall work, interior/exterior paint, refinished the kitchen cabinets, new front deck, landscaping, new appliances, etc.

After listing the house in early December, I have a buyer and a closing date of 1/24/02. I'll net about $30,000 pre-tax on this one.

I think I'll stick with this niche for a while. I have enjoyed turning neighborhood eyesores into attractive homes that new home buyers get really excited about. The profit isn't bad, either.

 
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