● They are buying these “ugly ducklings” at wholesale prices, then rehabbing them to new-home standards. Once complete, they offer them for sale at prices below what a typical buyer would expect to pay for a home with comparable features.
I saw an investor-owned rehab in Stone Mountain recently that might as well be brand new. It has three bedrooms, two full baths, a fireplace, garage and a privacy-fenced backyard. Upgrades included new granite countertops, high-end faucets and fixtures, and all new lighting throughout. In addition, the HVAC system is less than a year old, and the house is under a one-year warranty. All this for only $93,000.
The wholesaler said that because he had acquired the house from a lender for only $33,000, he was able to build in a reasonable profit for himself and still offer the home to an owner-occupant for a remarkable price.
● Other investors are buying now and making only the minimum repairs needed to make the house safe and livable. They avoid major system repairs when possible, hoping to rent for several years and watch the market recover.
Both strategies are viable. Whichever strategy they choose, there are specific characteristics these investors seek. Next week, we’ll examine them.
John Adams is a broker and investor. He answers real estate questions on radio station WGKA (920 AM) every Saturday at noon. For more real estate information, visit www.money99.com.