As many of you that keep up with my real estate investing site know,
we were fortunate enough to buy a property at Jackson Lake near our home
in Atlanta for a second home. What I did not realize before I started
toying with the idea of looking at this type of real estate was the
immense profit potential that resort or vacation properties hold. This
point was further driven home to me by a student who is starting to
successfully work the condo market in a resort area on the east coast.
He and his wife have bought and sold several of these properties in a
very short time frame, and the profits are over $40,000 per deal with
little if any renovation/rehab! Sounds like a nice way to buy real
estate!
Resort / Vacation real estate can make some great profits for several
reasons:
This type of real estate is generally by people who live some
distance away from the property.
There is a high likelihood that this real estate is not used much
anymore because the owners do live so far away, and is thus an unwanted
expense in both time and maintenance for the owner.
The owner is not able to necessarily fully keep track of the rate of
appreciation on his or her real estate. Furthermore, with the decline in
the stock market of the last year or two, many more dollars have been
flowing into these types of properties making them rise greatly in
price. Even if the owner knew the market value two years ago, that may
be very low in todays market. This type of real estate is more liquid
than in the past because of the demand for them by owners.
The properties are vacant, and not full of peoples best furniture, so
the owners are more likely to be willing to allow you to option the
property or lease/purchase it with the right to access it so that you
can show it to prospective buyers.
Your buyers will not be as picky on cosmetics or other common owner
occupant issues because it will not be their primary home. To give you
an illustration of how you can literally buy real estate like this, even
at full retail, and create immediate substantial profits, I will walk
you though my personal deal on our lake house. We purchased our property
at a discount from the appraised value. The property was priced in-line
with other one-bedroom properties on the lake. I know what you are
thinking -- who would want a one-bedroom property?!? Not me! Not with
two kids, two dogs, a wife, inlaws and friends. A little too many people
in one room for me. What is unique about this property, and several
others that I have seen since I have been following this market, is that
this one bedroom house was actually very large, approximately 1300
square feet. What I saw was that it could easily be cut into a
three-bedroom house for a thousand dollars or so, which would raise the
price some $50,000 at a minimum. Thus, some of these properties can
literally be turned from one bedroom to three or four with some new
walls and doors. Walls and doors are cheap.
We had pondered selling the house after cutting up the rooms, but
have decided to keep it and make it a base of operations to find other
similar properties that we could work with. We are implementing the
following system to make money while we are riding around on the boat
and enjoying the water:
Get a recent list of comps from a local realtor for recent sales at the
lake. Drive around and look at these to learn what areas of the lake
sell for more etc. A market like this can be learned in a day.
Write down the address of each property that we see that looks
neglected, overgrown, or in need of repair. (The address must be posted
on the docks by law on our lake).
Write the handwritten letter in our course to each of those owners.
Call to follow up with those owners. If they do not respond to my
letter.
Ask if they are willing to sell, and if so what their best price would
be?
If too high, ask if that is the best price that they could give on this
real estate.
Propose an option/lease option or a straight purchase to acquire the
real estate.
Market the property through newspaper advertisements and signs on the
dock facing the water. If you have trailers on nice lots, the break up
and liquidate strategy is also something you should consider. Speak to
several used trailer companies and advise them that you are acquiring
some lots at the lake with trailers on them and would be interested in
selling the trailers so that you could do new construction on the lots.
Ask them what they are interested in and the prices they could typically
pay for single-wides, double-wides, or triple-wides. We have been given
a general number of $15,000 for a nice double wide. They will come out,
take it, and cut you a check the same day. If you can find a lot with a
mobile home that is priced for the land only, might it make sense to
sell the home and sell the lot after the home is removed? This could be
an easy $15-20k payday even paying near to full retail.
In closing, this is a neat market that really is primed to be
lucrative because of the current economic situation. People are buying
this type of real estate like never before, and owners often do not know
what they really have because of recent appreciation. I would urge you
to consider this strategy as something to work into your real estate
investing tool kit. I would urge you to especially look at one bedroom
properties on the market, even listed ones, and see if you can break
them up into more bedrooms which will give you a huge immediate profit
with little effort or expense. This market is not small. We saw several
other properties that could have been cut into more bedrooms like the
property that we bought, but the water as deeper and wider where we
purchased. If you are buying lake property, and cannot decide between
two properties, deep-water properties always sell faster and are worth
more. You can get a topographical map of any lake to see where these
lots are. I hope that this new source of real estate deals will be
lucrative for you!
