6 Real Estate Investors on the Best Deals They’ve Fetched on Homes

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John Stuart Mill, a 19ththA century British economist, in his 1848 book Principles of Political Economy, shared this general thought: “Landowners get rich in their sleep.”

He was right. In the nearly 175 years that have passed since then, tremendous wealth from investing in real estate has been passed down from generation to generation. But you don’t have to be a millionaire to start your own run as an investor.

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A modest purchase can turn into a profit – money that you can reinvest in another property. Or keep the property and let the rental income pay your mortgage payment, with money left over at the end of the month. And sit back and watch your investment grow in value.

GOBankingRates asked investors about some of their favorite investments, and you might be surprised at how little they invested to make a big profit.

Pennsylvania Gem

Ryan David, a Pennsylvania real estate investor, said he was contacted through his website as soon as it launched about a potential purchase.

“We received a lead on a property tied up in an estate held by a family member who lived four states away,” David said. “We closed for about $15,000, which was the price they asked, and then immediately resold the property to another investor for $55,000. No work or rehab has been done just a quick resale as is. To date, that was the largest spread I have ever made on a simple transaction.”

Memphis money maker

San Diego-based Danielle Wolter, who runs The Million Dollar Mama blog, said she’s invested in a variety of properties over the years, but the one that particularly caught her eye was a house in Memphis, Tennessee.

“It was a family home that needed renovation. I bought it for $76,000 and paid a contractor $20,000 in increments for the remodel,” Wolter said. “I had to fire that contractor and hire another one to come in and fix the first one’s bugs for another $20,000.

“I was all in for $116,000. When I went to refinance, the property was appraised at $156,000, giving me $40,000 in equity immediately. The mortgage (including tax and interest) was about $600 per month and the rent received is $1,200 per month.”

She said she is in the process of selling the Tennessee property, which is now valued at $210,000.

In and out of Indianapolis

Alain Perez-Majul is a full-time real estate investor through his Indianapolis firm, Virtue Cash Buyers, and he shared this story of a short-term purchase that turned into a winner. It is a “very old” apartment building and so worn down that it has to be demolished, he said.

“The owner lived in Chicago and didn’t want anything to do with the property as it was giving him a headache, and I was able to help by taking it off his hands,” he said. “I held the property for a few months and sold it to another investor for a profit of $80,000. Within a month the property was demolished and to this day – I bought it about four years ago – it is still an empty lot. I think the investor is waiting for the area to spin a bit more before building on it.”

A dirty pleasure

Benjamin Dixon, a licensed real estate agent with The Mackay Dixon Team at Douglas Elliman in New York City, worked with a client to find an investment property. He used this strategy: look for “the dirtiest house possible in the best location”.

“Many shoppers don’t have the imagination to look past dirty windows and walls that need painting, or floors that need refinishing,” Dixon said. “I recently found a fantastic property in Bridgehampton for a client. We bought the very run down 1970’s house for $2.8 million and renovated it for $1 million to freshen up the home. It is now under contract for sale for $6 million and I have a very happy seller.”

A handshake deal

One of his best deals fell into Tomas Satas’ lap when a cousin called and said his neighbor wanted to sell his property. Satas, the founder and CEO of Windy City HomeBuyer, met with the seller, a gentleman who wanted an easy transaction without real estate agents, buyers and inspectors going through his longtime home.

“I examined the house and it had some major problems. Wouldn’t have passed the inspection,” Satas said. “I spoke to him about it and asked how much he wanted for it. Almost fell over when he told me. (I) asked how he got this number and it was double what he paid.

“The man was still operating with 1980s prices. I explained to him that he could make more money by having it appraised; but if he wanted I’d write him a check right then and there. He kept his simple life simple, took the check, I fixed the foundation and some other issues and had the (biggest) margin percentage of any flip I’ve ever done.

“The best property I’ve ever bought was with a handshake. I learned he was a keen woodworker, so I sent him a very large amount on a hardware store card to thank him.”

Patience pays off

It took Alyssa Carpenter patience to find a seller willing to accept FHA financing in Austin, Texas when she was looking for her first home: a duplex investment property.

“I was able to secure this property with a 3.5% down payment at a 2.5% interest rate,” said Carpenter, who runs finance-based website FI/RE Manual. “After a quick renovation, I was able to increase the rent from $700 for a two bedroom, one bathroom condo to $1,400 for the same unit. The tenant just renewed the lease for a second year. I just moved out on the other side (three bedrooms, two bathrooms) and rented it for $1,900.”

She continued, “Being able to buy an investment duplex with so little down was incredibly powerful. Rent gross $700 a month over mortgage. This property also has the estimated purchase price of $390,000. I received a soft offer from another investor for a purchase price of $515,000. I’m not selling yet, but it’s amazing to see this appreciation in just a few years.”

your advice

Real estate investors shared their advice for those interested in investing in residential real estate themselves. It starts with networking and marketing yourself as an investor so potential sellers know to reach out to you.

“Let everyone know… you’re a real estate investor and you want to buy a property,” said Antonio Cousin, the agent/owner of Service 1st Real Estate in Louisiana. “You never know who you might come across who has something to sell and who can help you. It’s also a good idea to join your local real estate investor association and network within the group. Internal networking could lead to additional opportunities or even a partnership.”

For a seasoned investor, there’s no substitute for knocking on doors.

“This is what the industry calls Driving for Dollars, where you drive through a desired location and knock on … doors with an offer,” said Craig Stevens, founder of Groundbreaking Real Estate in the New York area. “This technique allows an investor to avoid bidding wars and can help build a relationship with an owner since negotiations are face-to-face. As the property is not actually on the market, some owners may be surprised at how much their current property is worth and be enticed by the potential to sell so quickly.”

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About the author

Jami Farkas has a degree in Communications from California State University, Fullerton, and has worked as a reporter or editor for newspapers in all four corners of the United States. She brings experiences as a sports editor, business editor, religion editor, digital editor and more to GOBankingRates. With a passion for real estate, she passed the real estate license exam in her state and is still debating whether to take the plunge into selling houses — or just writing about selling houses.

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