My wife and I recently retired to Cookeville, Tennessee from Las Vegas, Nevada. We are in our late forties and decided to leave the “rat race” after twenty some years of working.
We were fortunate enough to beat the housing bubble burst and got out of Nevada with a nice chunk of change, which we planned to invest in real estate in Tennessee.
The first “flip” property we bought was a 1959, 1800 sf, 3-bedroom, 2-bath, brick house on a half acre in a nice area. It was a VA repo and we got it for $59,500. The problem with the house was it was a complete disaster.
It needed a complete gut and rehab. This we did lovingly for about five months, (It darn near became like a daily job!) and in the end we had a beautifully renovated property. We did all the work ourselves as we are retired and have the skills, but as I said it became like going to work.
After all the work was done, we listed with the agent who found it in the first place. We had, more or less, said she could list it when we were done. That was a mistake.
After a month of no bites and one poorly done open house, (She didn't seem to have the time on the other weekends for more open houses.) I ended up making a deal with the neighbor next door who had watched me rehab the house for the last five months. She wanted to buy it for her niece and finance who were just starting out, had seen the house and loved it, but couldn't afford to buy it.
I was able to discount the price about $13,000 (Again, I had used Realtor advice to set it too high in the first place) to $125,000 and negotiated a cash down of $30,000 and took back a note of the remaining $95,000 at 8% for 15 years or about $907 a month.
Well, we had to pay the 6% realtor fee, but with all the interest we are making from the note we got that back.
Couple of lessons here: Do your own comps and never use a Realtor to sell unless you find one you can “trust” and won't screw you. Buy and sell “for sale by owner” if you can. We did this with our Las Vegas home and it went smoothly but you have to be persistent, advertise like crazy and have faith in what you're doing. There are all sorts of seminars, books, e books, courses, etc. that you can use a resources to do this stuff. You are not alone. You need to educate yourself as best you can because no one else will be looking out for you and the paychecks don't come bi-weekly, but they are much larger when they do and are so much more rewarding.
Our second flip property was a 10-year old, 2240 sf, 4 BR, 2 1/2 bath double-wide mobile home on about an acre. It was a bank foreclosure and we got it for about $43,000. It appraised for over $100,000. It needed needed all the cosmetics and we did that for about about $12,000 including having it painted top to bottom by professionals painters (the only way to go on such a big home). We flipped it for a modest $93,000 thee months after we finished it for $3000 down from a couple with solid retirement income (Pension and SS) and carried back the remainder for 30 years at 7% for $598.77 a month. They plan to pay it off much sooner but I hope not, the interest on this note is incredible!! That is what it took to sell this “manufactured home”. Because of the credit crisis, banks were only going to lend 75% on a house like this and if I had over $20,000 to put down, I don't think I would be buying a manufactured home either.
There are two examples of recent flips we did in middle Tennessee over the last two years. We do about one flip a year which takes about four to six months not working very hard at it. I could work harder and do more flips and make more money, but then it would become to much like a job and I sure like having the time with my family and to spend on what I want to do and not be in the rat race.
I like the “passive income” deals like these because they create long term monthly wealth for the future and there are all sorts of ways to do them. I'm currently learning more how to do this with OPM (other people's money) like the big boys do!
The bottom line is that you have decide your own priorities and pursue them in order to achieve a lifestyle that doesn't include working for someone else.
Good Luck and enjoy every day to the fullest.
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