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Kitchen Before
Here is a story about how one person made a great profit in Cambrian real estate with some extra cash and a small amount of effort. A previous blog of mine spoke to the hot condo market that exists in Cambrian today, and this posting takes it a step further by illustrating how big money can be made. As in all investing, the idea is to buy an asset (in this case a condo) at a low price, add value and then sell at a higher price. Sounds simple, and it is if you follow a proven strategy and avoid any big mistakes. So here goes….
In February 2012, my friend put a $274,000 offer on a condo that the bank was short selling. It required a $10,000 deposit and the bank did not give final approval until the end of October (yes, it required more than 8 months for an answer). Once the bank gave final approval, they gave my friend 10 days to close the transaction. Luckily, he had the cash in a bank account which allowed him to get the transaction done. As a side note, IF he had not had the money, there are hard money lenders who provide experienced real estate investors cash in less than 2 weeks (for a cost).
Since February, the market had gone up in value, so instead of keeping the condo as a rental (his original plan), my friend decided to rehab the interior of the unit and resell to a retail buyer. This practice is commonly called “flipping”. Using a contractor I referred him to, he remodeled the kitchen and baths, and did new paint and carpets throughout the home. The rehab project cost approximately $25,000 and took no more than 2 weeks. The following week after completion we were back on the market with a $399,000 listing. 9 days later we had accepted an all cash offer for $420,000 and 10 day close.
Not every rehab goes this fast and smooth or provides such a great profit, but this project illustrates what can be done when a property is bought at the right price AND sold in a “hot” market. If you don’t have the experience or risk tolerance to take on such a project, note that investors like me will pay finder’s fees or commissions for properties that are brought to us at the right price. We are looking for houses and condos that need lots of work, so that we can add value and profit from the opportunity. Thank you for looking!
