It's, no doubt, a terrible economic time. In spite of that, my youngest son and I have been doing pretty well buying, refurbishing and reselling foreclosures here in Lexington.

We did three last year, have one in the works and are bidding on several right now. Most are HUD repos.

A typical one last year was an 1100 square foot, 87 year old single story frame home at the edge of an area undergoing lots of renovation, mostly by people associated with the University of Kentucky and other professionals. This little place had a 2 fuse electrical system. We bought it for $40,000.00, spent $34,000.00 in renovations. It appraised for $110,000.00 when we finished it. It turned out great, and my oldest son wanted it. We had offers for $100,000.00 just before it was complete.

I just supply funding and moral support and my son does the rest. By starting with a conservative selling price when complete, building in a 10% contingency fee (for "surprises"), building in a 20% profit and then bidding the difference to purchase the property, we cleared $50,000.00 in 2008, and didn't start the first project until April. At closing, we have the dumpsters outside the building, and start on it immediately. We work on a 90 day timetable, and have a reception for all the subs and other "helpers" on the 88'th day. The open house for realtors is on the 89th day, and the house goes on the market, if it's not already pre-sold, on the 90th day. We are only involved in homes that will sell in the $85-125,000.00 area...lots of Federal assistance programs I know about thru my work with banks and Credit Unions.

We do a new dimentional tile roof, new windows, new electrical system, new siding, new water heater, new heat pump and furnace, new bathroom and kitchen with tile floors and new washer, dryer, stove and refrigerator. We have remote control fans in most rooms and recessed lights with dimmers. Bathroom and kitchen hardware is a step above builder quality. Cabinets are solid oak and the kitchen counter top is generally granite. That way, instead of having to say, "you have three more years on the roof, or, the furnace is 10 years old", we say, "mechanically, all the infrastructure is new". Purchasers don't have to buy anything additional, and most are stretched to the hilt to qualify. Supplying the washer and dryer is not conventional, but much appreciated by the buyer, and helps the "turn-key" approach. The buyer gets all the warranties on the appliances and a 5 year warranty on the renovations.

My son hopes to leave his day job and do it full-time when the market improves.

The current project involves removal of a large slab from a demolished home and building a 1500 square foot unit from scratch.

My son and I are enjoying working together.

And that's what's REALLY important.


Russ

Russ, I have also done this in past years...One thing did/does bother me...Making a buck on someone else's misfortune..as in foreclosure that forces families from their home...

We use to look at abandoned homes, Estate sales where they just want a quick liquidation, and homes that are just in need of repair..The last type is usually a project that produces work for contractors..

Hi Russ, (hope you don't mind the informality),That is one of the things I like about capitalism, if you want to get in and have a go, you can get somewhere, but sitting back and letting everyone else help you is not always very rewarding.
As Fran says,you are utilising the misfortunes of others, but that is not your fault, if you don't do it the big fellas will do it anyway.
BTW, I am interested to know how your Mexican friend is fairing with his diabetes induced problems? It is never far from my mind. I hope he is coping ok.
Ray

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Ray The Saint

Just as Ray points out the foreclosure has already happened so seizing the opportunity make perfect sense before some other commercial enterprise steps in and does the same. By not picking up the opportunity will in no way benefit the previous owners.

My main focus is to support my son on these projects. Typically, financing is tricky. My oldest son works for me, plays bass and has the same education background as I do. He's a "right brainer". The young guy is just the opposite. He's into cars, drives a delivery truck and likes to work with his hands. I have to work hard to come up with projects we can do together. I'm terrible with anything mechanical, so we rebuild old cars, old Cushman motor scooters, have a DJ service that works car shows, and now, have the remodeling thing. My contribution is limited to providing financing. We buy HUD repos after the bank has them, and never deal with the current or previous owners.

So far, I haven't taken a dime out of our projects. Just trying to be a good Dad.


Ray, on the subject of Ranolfo, I'm still taking him to his daily appointments to clean the wound and try to keep his sugar level under control. He's sleeping in a cot at my home and spending all day in a wheel chair at the restaurant he used to work at. He goes back to the hospital a week from Monday to see if the knee is ready for a prothesus.

I have arranged for transportation for him back to Mexico when he's medically and emotionally ready to go.

Putting it kindly, he's slow, and doesn't watch his diet, personal health and clenliness issues, etc. Can't remember if he's taken his insulin.

It's been a daily thing since Christmas Day, and I'm tired. I'm the only one he has to help, and I'm honored to do it.


Thanks for asking,


Russ



[This message has been edited by captain Russ (edited 03-07-2009).]