drewjones
New Contributor
I was shown a plan back in 1996 about how to start from virtually nothing and end up retiring within 10 to 15 years.
The idea is to keep reinvesting profits from sales, starting with the first house.
terms are 45 to 60 day turnaround from close to sold.
minimum profit = $10,000 per house
Rehab work schedule = 30 days.
On market 15 to 30 days at ((purchase price + rehab costs) * 1.5 improvement markup)
Example:
Buying Close is July 1st
$100,000 purchase price
+(plus)
$ 20,000 total rehab costs
----------------------
$120,000 total
*(multiply)
1.5 improvement markup (can be changed due to market conditions)
-----------------------------
$180,000 This is what I put it on market for. (+ or - 5,000 to 10,000. Still in profit.) The idea is to make $10,000 minimum per fixer upper. Market tells me between 165 and 200. Not every house is going to have the same profit margin, so I add these scenarios into the equation.
Lets say the house sells for $165,000 as an example. Paid off loan.
Profit on this deal $35,000 ($45,000 - misc costs involved) as an example.
Before this deal closed, i found another one that popped up. Give it 30 days to close)
October 1st, loan closes for 125,000.
$125,000 Purchase Price,
+(plus)
$35,000 Rehab costs.
---------------------------
$160,000 Total costs, more rehab work than initally planned out to be.
*(multiply)
1.4 improvement markup, this is not going as planned.
---------------------------
$224,000 Market Price
$200,000 Sells for
$30,000 Total Profit (40,000 - $10,000 misc costs.)
for this one it took 90 days to turn around. what a drag.
By December 1st or lets say, mid december I have
65,000 profit to gear up again by jan 1 or even feb 1.
Granted this based on cash only, but even if I got loans, it would move alot slower than if I had cash...that is why I give it 10 years to start a subdivision rather than 5.
So if by the end of year 1, ive already completed 2 houses with 65,000 profit.
Year 2, I complete 3 to 4 houses using the same method and rules.
Year 3, I will be able have 2 projects going at a time completing about 6 houses for the year. Profits still being reinvested. This year I am managing the crews working for me.
So on and so on....the plan is to double the number of houses a year until there is enough profit to buy land for subdivisions..
Subdivisions will take longer time to complete, though the same methods and rules in place. Start on a 5 lot subdivision and move up from there.
End result, building communities with all the mortgages and commercial leases held by the new mortgage company as well as property management company that I build up from scratch. Not to mention, the new real estate company, so i can gain commisions on everything i sell, then the points from the residential loans and commisions from all of the commercial leases that is being leased off of my land.
In about 30 years, sell it all and buy an island, if not burnt out by then, repeat process from subdivision level, adding tourism to your island.
in 50 years, either i will be dead or buying a bigger island with only me on it.
Then start from scratch.
The idea is to keep reinvesting profits from sales, starting with the first house.
terms are 45 to 60 day turnaround from close to sold.
minimum profit = $10,000 per house
Rehab work schedule = 30 days.
On market 15 to 30 days at ((purchase price + rehab costs) * 1.5 improvement markup)
Example:
Buying Close is July 1st
$100,000 purchase price
+(plus)
$ 20,000 total rehab costs
----------------------
$120,000 total
*(multiply)
1.5 improvement markup (can be changed due to market conditions)
-----------------------------
$180,000 This is what I put it on market for. (+ or - 5,000 to 10,000. Still in profit.) The idea is to make $10,000 minimum per fixer upper. Market tells me between 165 and 200. Not every house is going to have the same profit margin, so I add these scenarios into the equation.
Lets say the house sells for $165,000 as an example. Paid off loan.
Profit on this deal $35,000 ($45,000 - misc costs involved) as an example.
Before this deal closed, i found another one that popped up. Give it 30 days to close)
October 1st, loan closes for 125,000.
$125,000 Purchase Price,
+(plus)
$35,000 Rehab costs.
---------------------------
$160,000 Total costs, more rehab work than initally planned out to be.
*(multiply)
1.4 improvement markup, this is not going as planned.
---------------------------
$224,000 Market Price
$200,000 Sells for
$30,000 Total Profit (40,000 - $10,000 misc costs.)
for this one it took 90 days to turn around. what a drag.
By December 1st or lets say, mid december I have
65,000 profit to gear up again by jan 1 or even feb 1.
Granted this based on cash only, but even if I got loans, it would move alot slower than if I had cash...that is why I give it 10 years to start a subdivision rather than 5.
So if by the end of year 1, ive already completed 2 houses with 65,000 profit.
Year 2, I complete 3 to 4 houses using the same method and rules.
Year 3, I will be able have 2 projects going at a time completing about 6 houses for the year. Profits still being reinvested. This year I am managing the crews working for me.
So on and so on....the plan is to double the number of houses a year until there is enough profit to buy land for subdivisions..
Subdivisions will take longer time to complete, though the same methods and rules in place. Start on a 5 lot subdivision and move up from there.
End result, building communities with all the mortgages and commercial leases held by the new mortgage company as well as property management company that I build up from scratch. Not to mention, the new real estate company, so i can gain commisions on everything i sell, then the points from the residential loans and commisions from all of the commercial leases that is being leased off of my land.
In about 30 years, sell it all and buy an island, if not burnt out by then, repeat process from subdivision level, adding tourism to your island.
in 50 years, either i will be dead or buying a bigger island with only me on it.
Then start from scratch.
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