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Steve Hamilton
642 followers -
WE BUY HOUSES.
WE BUY HOUSES.

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Whatever your goals, knowing how to work with keepers, leapers and sleepers will help you build a brighter future. Some investors plan their careers around one type of property. others, like me, build their careers around all three. Learn how to recognize each type of property, and learn how to fit it into your investment strategy. Use them properly, don't ask a keeper to churn a quick profit like a leaper, and don't lose out on a leaper by mistaking it for a sleeper. Leapers, keepers and sleepers they're all over the place. It's time to get out there and buy a few.
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Everybody knows a sleeper. it's the house with the faded for sale sign in the front yard. Or it's the house where the for sale sign changes every few months to one with a new real estate agency's name on it. Or it's the one you see advertised in the paper week after week. The sleeper is the home where the seller over estimates the value of what he has. As a result he dosn't sell. Some stubborn sellers never wake up. But most of them eventually come to realize that they must accept a lower price if they want to sell their property. And that's where opportunities are made for the investor who knows how to keep watch over sleepers. As an investor, it's your job to look at property even those that, at first glance, appear to be overpriced. Many investors advise against looking at those types of property, but I desagree. Thats how you find sleepers. Take a look. If you like what you see but you don't like the price, just sit back and wait. Eventually the seller will come around, and you'll want to be there. Just make sure that the seller and agent know you're interested, for the right price.
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Not every low priced home makes a good candidate for a leaper. In some areas homes with fewer than three bedrooms don't move well. How is the parking? Many would be buyers have trouble scraping up a few thousand dollars to buy a home because they've spent all their money on new cars. They want to be sure they have a place to park them. If the building requires major repairs, will you be able to afford to carry the building while repairs are being made? More importantly, will you be able to recoup the full vlue of the repairs? And what about location?So long as property seems to be moving well in the area, I don't insisist on top locations for my leapers. Financing your leaper is another major consideration. If you must obtain a conventional mortgage from a lender, you'll be incurring thousands of dollars in closing costs that must be recouped when you resell.That's why I prefer to stick to the low cost leaper that our credit line can handle, or properties where the seller is willing to carry the financing for a short wile. Finally look at timing when considering a leaper. If you purchase your leaper in October, chances are it won't be ready for resale for a month or so. You'll be competing with Santa Claus for your buyer's dollars and Santa always wins. figure a few extra months carrying costs into your calculations.
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Once your tenants move in, the most important thing you can do is show them you care. Never put the tenants second. If you make an appointment with them, keep it. If you promise to spray for bugs, do so. You cannot respond favorably to every request. Do not feel obliged to do so. Better tenants will not bother you with petty requests. That is another reason that proper tenant selection is vital.
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I'm always on the lookout for dirty, smelly single family homes, because this type property makes a perfect leaper. Buyers tend to feel that since the're buying a new home, everything should be spanking clean and ready for occupancy. I get real excited when the yard is overgrown when the rooms haven't been painted for twelve years, and there's no shower in the bathroom. One of my favorite leapers was a home purchased for $26000 from a bank. While the attractive exterior enticed many would be buyers they were turned off by the stench and filth awaiting them inside. but the building was sound. It's mechanical's in good shape. I ripped out and replaced the carpets, painted the interior, and replaced the wall hung sink in the bathroom with a vanity sink. I financed the entire transaction with a line of credit. I had to make one payment on the line of credit before that closing took place, leaving just about $30,000 in profit from this one little leap,
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The income factor when dong problem analysis. Occupancy rate break even will depend on area rent levels, but as a rule of thumb, look at occupancy under 92% as a danger sign. Compare area competition as a further check. If it's possible, you should plot the occupancy rate by month for the past two years to establish trends and any major changes which may indicate the root of the problem. Tenant turnover normal rate in large projects will run about 33-50 percent turnover per year. Monthly move outs will vary from 3 to 6 percent depending on seasonal influences and local practices. Rent schedule. How do rents compare with competition? Is there a proper difference between one, two, and three bedroom units based on market demand and availability as well as square foot costs?Are extras such as view or additional space in particular units being reflected in rent rates.
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The problem is not just that housing is too expensive, the problem is that people are not earning enough to afford it and we need to have as aggressive an economic development agenda as we do an affordable housing agenda. 
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No matter how good or bad your area's rental market is,you are in constant competition with other landlords trying to rent to good people. You must make your rental stand apart from the crowd. You are in business and the renters are your customers. You must attract better quality, long term, paying renters away from other landlords.
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