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Millionaire Possibilities – 405-286-2000
A
Landlord and Property Investor Association
March 6, 2008 will be at St. Luke's Church
Going Against the
Grain, Investor Finds Bountiful Bank Owned Bargains
By Daren Blomquist
Despite the abundance of negative buzz surrounding
the real estate market, Kirk Leipzig decided to
pursue foreclosures as investment properties.
He has found that decision to be a very good one.
"I just bought two brand new homes as REO from the
bank," said the Tennessee-based investor in
December. "I am buying five more new homes next week
from the bank. I am buying $750,000 homes for
$450,000.
"This is the time to buy, and to make a killing out
there," continued Leipzig, who's been a RealtyTrac
subscriber for about nine months. "But you need to
totally understand your market and educate yourself
daily on your market. Then go buy, buy, buy."
What's most surprising about Leipzig is that he is
not buying and holding - as many experts recommend
in a down market - but buying and flipping.
"All the properties I currently buy are for flipping
only," he said, acknowledging that he always has a
backup plan because of the difficulty selling in the
current market. "I always buy a property now to
flip, but in the back of my mind I know I can
lease-option it, or rent it if it does not sell as
quickly as I would like."
The two properties Leipzig most recently purchased
were appraised at $700,000 and $750,000 but he
bought them for $450,000 each, giving him enough
room to "fire sale them out and make a great profit
easily."
"I
went in and did a punch list, and staged them, and
they are beautiful 4,200 square-foot homes in the
best city in the county. I have an offer on one of
them now, and I just put them on the market one week
ago yesterday," he said. "I will make, after realtor
fees, holding costs, closing costs, etc. $185,000 in
two weeks. Plus the new homeowners will have $75,000
equity in the house immediately. Everyone wins, and
that is how you sell in this market. Find the
win-win and everyone truly will win."
Leipzig emphasized the importance of buying right in
order to sell effectively, noting that investors
should find a well-performing area and then stay
focused on that area. On his prospective purchases -
which are in the $300,000 to $700,000 range - he
does not buy unless he believes he can sell for at
least $100,000 more than his purchase price,
including realtor fees and repair costs.
As soon as he acquires a property, Leipzig promptly
goes to work to get the property sold as quickly as
possible.
"I visit the other houses on the market in the area
I just bought a house. I want to see what my
competition has or does not have compared to the
property I just bought," he said, "I make sure the
property inside and out is totally 100 percent
perfect with no flaws whatsoever. It must be
perceived to be the best property in the area. Then
I put the price below market value and current
appraisal."
Beating out the competition also means that
investors may be willing to pay a higher commission
to agents or provide other concessions to help the
property stand out to potential buyers.
"I
talk with my mortgage person and have him do a 3-2-1
buy down or a 2-1 buy down on the mortgage points,
so my house will stand out from any other," Leipzig
said. "Remember, in this market, pigs get fat, and
hogs get slaughtered. You do not want to be a hog."
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