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investors

Who’s Buying the Foreclosures?

by Larry D. McGee, Denver Realtor on August 17, 2008

The Denver Post ran an interesting feature article on Sunday, August 17. The feature with the byline of Margaret Jackson, discussed just what kind of buyer was snapping up the low priced foreclosures in Metro Denver. Turns out it is real estate investors, not the fix-and-flip bunch, but the serious folk that buy for long term hold. I have had extensive conversations with Margaret over the past year concerning the impending onset of this good news phenomenon, and I am most pleased that she wrote a well researched piece on this subject. The fact that long term hold investors are buying cheap is a strong indication that they expect to sell high. All of those unfortunate families that have lost out to foreclosure have to live somewhere, and after living in a house, it’s tough to go back to an apartment. The fantastic thing is, these properties are cash flowing. How can that be?

Well, it is actually pretty easy. The various financial institutions that have been foreclosing on homes find themselves with a bit of an excess of inventory. This excess of inventory is forcing values down to a point that it makes sense for the investor to buy such properties and rent them to people that have lost out to foreclosure. Investors are buying with cash, or making considerable down payments to obtain acceptable financing.

It is the market at work (albeit the bloody side of the market), with a little help from various levels of government. And a caution, before everyone rushes out to cash in on foreclosures, this is a long term investment strategy, probably 4-5 years. Those savvy investors who buy cheap and rent the houses for 4 years or so will fix an improve as necessary, and sell into a much busier market down the road.

This is an exceedingly complicated story that will take many blogs to fully explain, so stay tuned. In the meantime, thanks Margaret. Investors buying for long term hold is great news for the Denver area market.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

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side yard

The Remodel

So, where did we start? I had a 20 cubic yard dumpster delivered to the alley and began the demolition process. In went the old water heater, toilets, bathtub, plumbing fixtures, rotting drywall, carpet, old doors and windows, the few cabinets that remained from the bathrooms and kitchens. Joe the plumber ripped out the old water and drain lines and Wes the electrician began replacing old wiring. We had a guy show up one evening who wanted to dumpster dive for recyclable metal. I certainly wouldn’t want to get in there.

Matt and Ron, the window and door guys, replaced all the windows and exterior doors. While a large part of the budget (if we in fact had one), those items greatly reduce energy consumption and noise. It is a savings for us over the long run, even though tenants pay the utilities. In addition, part of the responsibility of remodeling, I think, is improving the curb appeal. The neighbors appreciate it and it contributes to the overall value of the street. So our concrete guy brought over the Bobcat and scraped the entire yard of all the years of rock and debris. He also poured a new walkway and a patio out back. With new exterior paint and some landscaping, we could be looking pretty good. Those last two items will have to come last, as money is running out.

Bathrooms

The first rooms to be transformed were the bathrooms. They seem to take the most time with showers/tubs and tile. Joe recommended the “snap together, comes in three pieces, no caulking needed” shower and tub inserts. Again, indestructible is the goal. We tiled the floors and tub surrounds. One of my favorite cabinet places has been Home Clearance Center. For years, we have been buying right out of their warehouse and getting great deals for bathrooms, wet bars, small kitchens. That is where I headed to see about the vanity sink bases. We like them at “adult height” instead of the traditional bath height. The supply they have now in stock is not the same as we had been accustomed to in the past. You have to order the well made stuff now, or choose from used pieces. I have been working with Don over there for years now. Knowing this project was going to be a rental, he offered a used 48” sink base with the countertop and sink attached-$50. I couldn’t resist. Okay, the countertop is sky blue, but it would be fine for a rental and no, the doors didn’t stay closed and I had to install magnet snaps, but $50, it’s a bargain. Then, as I was about to leave, I spotted a 42” sink base in the showroom. Don said it was installed and returned by a customer and he could let me have it for $109. I was thinking I was so crafty and such a wheeler-dealer until I realized it was a non standard width and any countertop would have to be special ordered. There went my bargain. Of course, this was after I had already bought and installed it. Just brilliant!

I am thinking I will just go to Home Depot and pick up a countertop in 48” and just cut it down to 43”, add a drop in sink and away we goSo we cut out the sink hole and I take it over to install and oops! . I didn’t bother to double check that the countertops are for kitchen depth base cabinets, not bathroom depth. Duh!

Jac and I were at Home Depot in Glendale and spotted a Corian countertop-43” in the clearance section. It’s an all in one-sink and everything. The color is great and the price is $339.00. What? I ask the manager if he would take less and he offers $285.00. Not good enough. We leave the store. Jac decides this is the solution to our problem and goes back the next evening. There’s another guy working who says, “Make me an offer.” Jac offers $200.00 and it’s a deal. The plumber puts it in and we are done with that. I return the other sink and we keep moving forward.

Let’s look at some pictures. Next article will deal with the kitchens. I’m exhausted just recalling all this .

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green room

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Written by Ann Connelly - Visit Website Sphere: Related Content

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