Dont Buy Ugly Houses!

Ugly houses can be great investments, but we don't buy them. We understand that there are lots of valid ways to make money investing in real estate. Buying and rehabbing ugly houses is certainly a good one, but we've chosen a different strategy. Our strategy is to buy good homes that are ready, or nearly ready, to move in. It has worked well and generated consistent profit deal after deal.

Can't imagine getting a good deal on an attractive house? Believe it or not, there are bargains to be found because nice houses do go into foreclosure, people do move, and people still need to sell fast for a lot of different reasons. Sure, not every house we buy is beautiful and has an immaculate lawn. But you would be surprised at how many "ready to sell" houses are available at below market prices.

Like anything else, it takes work and know-how to find good houses. Here are three good reasons to look for clean, attractive houses.

1. Rehab and marketing time is greatly minimized. In many cases, you can show the house even before you buy it. In fact, if a house is clean and ready to show, we insist that we be able to show it during the time between signing the contract and closing on the house.

We are closing on a house in Chattanooga, TN this month that we sold before we even bought it. How did we do that? The seller was motivated because they had already purchased another house. We actually put a contract on it with the contingency that we would have it sold before we bought it! Our system of selling almost all of our houses on lease-to-purchase contracts keeps our average marketing time down to a week or two, so the contract with contingency was still very attractive to the seller.

The house was ready to sell. We only spent about $500 to fix it up. We sold it through a lease-to-purchase contract before we bought it, and our profit is $14,400 on this deal.

2. There are few rehab surprises. In our experience, no matter how carefully you examine a house before you buy it, there are always unexpected expenses in the rehab phase. It's just hard to foresee some things until you begin remodeling. Of course, we prefer to keep these surprises minimized. Nice houses with little or no rehab are great for minimizing the surprise.

Incidentally, this is a good reason to have a home professionally inspected before you buy it. It's also a good reason to budget some contingency funds for houses that do require remodeling. 3. Free up your time. You may enjoy the rehab and remodeling, but the path to true wealth in real estate is in finding and making the deals. If you are buying nice clean houses, then your time is spent in the deal making, not in managing the remodel projects.

Because we've made the choice to buy attractive homes, our profit margins may not be as extraordinary as some rehab deals might appear. We don't have any stories of buying a house for $35,000, investing $35,000 in rehab and then selling for $100,000+.

Instead, our path to wealth has been through buying nice homes from motivated sellers at below market prices. We sell these houses through lease-to-purchase, or "rent-to-own" contracts at market or slightly above market prices. Our profit is generally $15,000 to $20,000 per house and our marketing time is usually less than two weeks.

You can do the math and see that buying nice houses can be very profitable for an investor. In our case, we prefer to handle more deals with these consistent profit margins, than work through the added stress of ugly houses.

Blake Watson is an active real estate investor,author and coach with Lucky 7 Seminars, a real estate investment training company headquartered in Chattanooga, TN.

email: blake@lucky7seminars.com
website: http://www.lucky7seminars.com

AP - Oil slipped below $54 a barrel Wednesday as stock markets across the globe fell and yet another U.S. government report illustrated the disarray in the housing market.

Reuters - The U.S. Department of Housing and Urban Development will loosen terms of its foreclosure-prevention effort so that the program, meant to backstop $300 billion in home loans, can be more effective, the agency said on Wednesday.

Reuters - The shares of big U.S. homebuilders and real estate companies alike slumped on Wednesday as housing starts fell to a record low and concerns spread the commercial real estate market is going the way of residential.

AP - Mortgage application volume fell 6.2 percent during the week ended Nov. 14, according to the Mortgage Bankers Association's weekly application survey.

Reuters - Treasury Secretary Henry Paulson and members of Congress clashed on Tuesday over the best use for the $700-billion financial bailout fund, with lawmakers demanding money to stem a national wave of mortgage foreclosures.

AP - Faced with exasperated lawmakers upset by shifts in bailout strategy, Treasury Secretary Henry Paulson launched a spirited defense Tuesday of his handling of the $700 billion program and expressed fresh reservations about tapping the pool for mortgage guarantees to relieve skyrocketing home foreclosures.

Reuters - Producer prices posted a record decline in October as the weak economy sent energy prices tumbling, data on Tuesday showed, while business confidence among home-builders slumped.

Reuters - Bank of America Corp Chief Executive Kenneth Lewis said on Tuesday it is "pretty clear" the U.S. economy is in a recession, and forecast no recovery until the housing market stabilizes around the middle of 2009.

AP - Homebuilders' confidence in a near-term housing recovery sank to a new all-time low this month, reflecting growing worries over the U.S. financial crisis, rising unemployment and weakening consumer confidence, an industry trade association said Tuesday.

AP - Home prices fell in a record four out of five U.S. cities in the third quarter as low-cost foreclosures flooded the market and the U.S. housing market's decline spread throughout the country.

Reuters - Freddie Mac could post losses totaling $20 billion to $40 billion in 2009, hurt by higher credit costs and write-downs in mortgage assets, an analyst at Friedman Billings Ramsey said.