Dallas-Fort Worth Real Estate Investor Club

Fix up and sell or sell as is?

  • 27 Mar 2018 5:02 PM
    Message # 6003074

    I’d like to get the opinion of the community.

    I am weighing the benefits of either fixing and selling or just selling as is a property that I have had rented for a few years. I am selling the property to improve my cash position. I am a weekend investor. I have been buying, renovating, renting and managing my property evenings and weekends outside of my W2 JOB.

    From what I have seen in the market I could probably sell it to a cash buyer for about $100k. If I fixed it up I could probably sell it for about $120 - $130k. I know that if I hold onto it in a few years it could be worth $150k with the way prices are going on the low end of the market.

    I have had the same renter since I first got the property about 8 years ago. The property could use some updating as well as some repairs. For retail sale I would want to spend about $10k to upgrade/update the HVAC, windows, flooring, paint, landscaping, etc. Whomever bought it would only need to spend a few grand to get it rental ready. Rents in the area are about $1200 - $1400.

    If I sold it as is I would not be using a realtor and would have much lower closing costs. With selling retail, closing costs could be 10%.

    So after the money, time (weekends and evenings) and effort selling retail I would net about $104k-$115k and selling it as is $100k. 

    Comments?


  • 27 Mar 2018 8:28 PM
    Reply # 6003368 on 6003074
    Deleted user

    This depends on our current financial position.  If you can easily spare the $10K rehab I would suggest doing that as you will net more.  If rehab is going to take you several months then sell "as is".  

    Also I always sell my homes with a Realtor. In the end you will attract more buyers and not waste your own time.

  • 28 Mar 2018 7:52 AM
    Reply # 6003915 on 6003074

    I am an Investor but have also been licensed for a long time so I'm glad to hear another Investor say that we can get more for a property than a FSBO, lol...  I appreciate that.

    When you list with a very good Realtor who specializes and knows how to sell and present a home, then yes, you do get more for you money.  Would you rather have hundreds of buyers looking at your home online, or just a few who find you as a FSBO ?   It's all about "netting" you more money (and time), not saving you money.  Even if you broke even from paying an extra 3% (on average) to a Listing agent, then it's worth it because you are out of the many, many hassles of selling it yourself.  My wife and I (we are a team) typically sell our listings at top dollar and get an offer (or offers) in just a few days if the home is presented in the best possible way.  But usually we can net the seller more.   Multiple offers will also "net" you more money due to the competition aspect of it AND with fewer possible repairs.   We also qualify the buyer before getting into contract.  That saves you the hassle of a contract not working several weeks later.  Who they have a mortgage with is also very important.

    If you can get a good  return for your rehab money, then that is what is preferred as it will draw more potential buyers into the mix (FHA buyers specifically) plus most buyers are looking for a home that is move in ready or has very little in rehab to do, and I mean VERY little.   Most buyers just don't want to deal with anything more than maybe painting due to time and a lot to do with no more extra money after buying the house. 

    Even if you sell your home "As-Is", a Realtor can still net you more money than by a FSBO selling themselves.   

    Bottom line is - by selling with a Realtor, you have more leverage if everything is done right BEFORE it's even listed.  

    Lots more stuff I could discuss on this.    This is why I love being a Realtor/Investor.  I get to play in both worlds. 

  • 28 Mar 2018 9:59 AM
    Reply # 6004204 on 6003074

    Thanks for the advice. I will likely go with option two, the fix and put it on the open market to get the best price.

  • 29 Mar 2018 8:01 AM
    Reply # 6006085 on 6003074

    So how big is the house? you said: 

    "For retail sale I would want to spend about $10k to upgrade/update the HVAC, windows, flooring, paint, landscaping, etc"

    Lets just say its a 1,000 sq ft house.  New AC $4,500, Paint outside $1,000, Paint inside $2,000, New windows $2,000 to $3,0000, Flooring $2,000 to $5,000 (vinyl flooring everywhere is $2,000), Landscaping $1,000 +, New Light Fixtures $1,000, Appliances $1,000, and ect.... 
    That's $15,000 to $20,000 in repairs and update to bring to the $130,000 mark. However if $10,000 will get you the $130,000 price then lets go with that number....

    $130,000 sale price minus $7,800 realtor fees, You will be holding the property for 2 1/2 months ($100 a month for each: insurance, taxes, utilities, interest on loan(if you have one))  total holding $1,000, $1500 closing cost and minus $10,000 repairs. You would make $109,700 vs selling it for the $100,000 to a flipper.

    Just make sure $10,000 in repairs will make you the $130,000 sale price.....

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