Three Good Ways To Find Pretty House Deals, Part 1 of 3Posted on March 11, 2013 by
We should start with defining what a pretty house really is. It’s not the price that makes the definition. The house could be high-priced, but most people in the pretty house business work in a range from $70-$200,000. If you’re in a high-priced market such as San Francisco where a $200,000 house is rare, your range will be higher.
The point is, pretty houses start at the bottom end and go up. It’s not just expensive houses. My definition of a pretty house is any house requiring less than $5,000 in work to get it in a good, saleable condition. An ugly house is one that needs a rehab or a lot of repairs.
I’d want you to work both sides of the business and become a transaction engineer who can recognize a deal when you see it, whether it’s pretty or ugly. Don’t fall into the trap of trying to get so specialized that you turn your back on lots of other profits. There’s gold in both the ugly and the pretty house business. Besides…
You Can’t Find Pretties Without Finding Uglies And Vice Versa!
Most people start with ugly houses because they’re easy to find and understand. They either wholesale or rehab and retail. That’s OK, but it’s only a start. Pretty houses are easy in, easy out. Usually it’s get the deed and lease option to a tenant buyer. That takes a few days, eliminates contractors and reduces holding costs. Plus, it produces a few thousand dollars in front-end profit. A person could get used to this part of the business and easily make the decision to ignore the uglies.
In my opinion, that’s not a smart move. I like a little of both. I’m about 50/50. Last month my IRA received $82,000 from two ugly house deals, and that was only my half! I’d hate to lose all that money because I had blinders on. So how do you find pretty houses? Well, there are a number of ways as discussed in my boot camps. We’ll focus on three good ones here.
Method Number One: Signs
Signs never fail to get calls-usually before you get home. I’m referring to stick signs you place on the side of the road. They can be put up with a 1 x 2 stake with a point. You can buy them at Home Depot in bundles, or with a wire rack.
The good news is you’ll get calls. The bad news is, some might be from the city asking you to remove one or two because someone has complained about them. If a call from the city will give you a heart attack, this business isn’t for you! Most cities have ordinances against signs, but some don’t. You’ll have to check into that, but the bottom line is, all cities have signs and a lot of students elect to take their chances knowing the most they can do is call and ask you to remove them.
I’ve heard news of some who were subjected to a fine as repeat offenders, and every once in a while I’ll hear of a city that gets nasty. I received a letter from a city office in Oregon asking me to advise my students they have ordinances against these signs. So there, you’ve been advised! I’ll bet this same city has ordinances against spitting on the sidewalk, sex before marriage and jaywalking.
Many students put signs out on Friday afternoon and pick them up on Sunday night to avoid the aggravation from the city. This may sound foolish until you look at the numbers. The sign cost about $3 each so if you put out 50, you’ve got $150 invested. Pick up the remaining 40 on Sunday night and the cost was $30 for the ten signs that come up missing…and I promise, they will.
If you get 10-15 calls over the weekend and buy 1 house (as you should), with a $20,000 profit, it’s a no-brainer. All of the sudden, it’s worth the risk of city heat. In some areas, they city could care less and your signs have a long life. Don’t be scared off by my warning here. Do your own due diligence and make the best decision for you.
Most signs are on fiberboard, around 18×24 inches. I like black letters on yellow, but have used other colors successfully. Be careful when you make up the sign, you don’t want to put too much detail on it. Remember, people are moving when they see it. Make the phone number large and don’t forget your website address if you have one set up.