Condos: The Most Profitable Property Class You’ve Never Invested In By Linda Baumgarten | REI USA
Select Page

Condos: The Most Profitable Property Class You’ve Never Invested In By Linda Baumgarten

by | May 12, 2022 | Podcast

REU Linda Baumgarten | Condos

REU Linda Baumgarten | Condos

Are you worried about going into the real estate business without much experience and not much money? This is the right episode for you as Linda Baumgarten shares tips and techniques on how you can earn money with less work and less experience. She admits that she didn’t have much knowledge when she ventured into the industry. That’s when she found a realtor who introduced her to condos. Tune in to discover which types of units are profitable rentals and what you need to watch out for in every potential condo investment that you’d never need to check on in a single-family or apartment purchase.

—

Watch the episode here

Listen to the podcast here

Condos: The Most Profitable Property Class You’ve Never Invested In By Linda Baumgarten

I want to share with you how to make massive profits with condos and coops, even if you don’t know what you’re doing, even if you have bad credit, don’t want to live there or have any experience. This is why someone asked me to put this presentation together because when I was a coach, I’ve found that many of my students’ very first real estate deals ended up being a condominium and you’ll see why. If you’re brand new at this, definitely we’d love to have you. This is right for you. I’ve found it to be a fast, fun and easy way to make cash in real estate.

As one mentor I have said, “Always look for the fastest way to make cash.” This is my disclaimer is that learn everything you can, trust but verify. Every state has its own rules and regulations and you definitely want to check into those. What is your situation? Are you working full-time? Are you looking to buy your own home? As we know, they’re super expensive now. Are you brand new in this whole real estate investing world? Are you already investing in real estate? This strategy is best for you. It’s perfect for you.

Also, what is your strategy? Are you wholesaling? Are you rehabbing? Are you buying and holding? Are you buying and selling notes, which I think would be great? If you’re like me and you don’t know the difference between a hammer or a screwdriver, this strategy is perfect for you. I’m going to show you how you can apply for condos, townhomes, any shared community. This is what’s going to be perfect for you.

I’m going to show you how to do all of these things using less money, work and experience in your spare time. As Stacy shared, I can run this thing anywhere in the world so it doesn’t matter. It’s easy, fun and fasts. Especially, you can get your first deal done in 30 days. In fact, I hadn’t planned to do this. In the end, I’m going to give you my email address. If you would like some quick strategies about how to market and get a deal within the first 30 days, feel free to send me an email. I’ll send it to you.

My Story

I’m also going to show you how to get access to my book for free. This is my first investing deal so you know where I started. I had attended a bunch of workshops all over the country then I came home and said, “I’m excited. I’m going to go find a piece of real estate, buy and rent it.” I looked everywhere. Every place I went into was a piece of crap because it needed so much rehab. I didn’t know any construction or how to evaluate things. The biggest thing is I didn’t know how to estimate repairs because there was no REIA where I was living.

Stacy, the organization you’ve put together, the whole team is amazing that you have access to this many teachers throughout the United States of America. Pat yourselves on the back for being here and part of this organization. I didn’t know much. I’ve given up. On a Saturday night, this guy calls me. It was like 6:00. I was having dinner and getting ready to chill out in front of a fireplace. This realtor called me and said, “I got a deal for you.” I said, “Jim, I appreciate it but I guess this real estate thing is not for me. I don’t know how to put it together and what I’m doing.”

He told me about a condo, which I didn’t know much about. It was in this complex and was my very first real estate deal. I want to share with you a little bit about how it works so that you can see that you can do it for yourself. This one I bought for $29,000. I think we’re going to see those days again, maybe not quite that low but they’re around. I bought it with a line of credit from my home. It was creative financing. I got a line of credit for my own home and was able to buy it that way.

It only needed carpet, paint and some cleanup. I was able to rent it for $300 per month, positive cashflow for eighteen months so that could be a car payment or buy your groceries. I sold it for $55,000. Let’s take a look at this. I didn’t use any of my own money. It’s all the bank’s money. I did not need any construction knowledge. I made $5,400 for positive cashflow and $36,000 profit on the sale. I was able to write it off for eighteen months. It was a tax write-off and I met my cat, Buddy. He’s still alive. I don’t know how. One more piece that I didn’t say is that when I sold it, I held a second mortgage for the person that bought it so I made a little bit more interest in the sale.

I even sold it creatively but there’s Buddy and he jumped into our truck one day in the middle of the storm. I hope I didn’t take the cat away from anybody else but I have a cat. This is a little bit about me. I was known as the Kiyosaki of Waterbury, Connecticut. I’ve done a lot of different types of deals. I founded the Connecticut REIA. I’ve trained over 15,000 real estate entrepreneurs, coached hundreds of people took massive action and that’s the important thing. If you listen to any trainers and speakers, they all took massive action to find success.

I’m known for being able to give you the tips, the tools and the techniques that you can implement now regardless of where you’re at right now. I’ve been featured in all these different places. The one I’m most proud of is Women of Fire. It’s a newspaper publication in the Northeast. They publish real estate commercial transactions. I was awarded Women of Fire, which are women in Finance, Insurance and Real Estate. I was very proud of that. I have a couple of books on Amazon. If you go to WomenAreSimplyBetterAtIt.com, it’ll take you right to the pink book.
[bctt tweet=”It is always recommended to have two exit strategies.”]
The second book is basic. It’s how to get started in real estate. The third one is an online course that I can offer to you if you’re interested. If you go to WomenAreSimplyBetterAtIt.com, it will take you directly to Amazon. I do have a website for making big profits with condos. I love to teach. Any opportunity I have to help people, I’d be glad to. This is why I do this and why I’m here is because of the people that I interact with. This is a friend of mine. She’s an artist. Because of real estate, she was able to do the things she loved to do, which was to create art.

In fact, I have one of her paintings in my office. She brought her artistic view to the before and after of that house. She also was a foster mom. She took care of teenagers, which needed a lot of help all because of real estate. I love her. I got a chance to meet her. There’s another woman, Sally, who was a school bus driver and not making a lot of money. School bus drivers don’t make a lot of money. She was able to find this little house before and after.

This is a house she found from a sign. She drove around town, found the sign and found it on Craigslist. Funny story, she called the phone number and the guy said, “Where did you see it for sale?” She says, “Why?” He said, “My brother is advertising it this way and he wants less than what I want.” She said, “I saw it on the first way.” Even more importantly, her town was giving way homeowner grants. She was able to get a grant to do the total renovation, including led removal, roof, new windows and everything.

The only time she had to pay that loan back was when she sold it. If you think that you don’t have any money, there may be money available to you. There’s money everywhere. It’s like Stacy says, she’s been raising money for self-storage. There is so much money out there. You have to let go that you don’t personally have money and get out there and ask people for money.

A little bit about me, I love to go trick or treating on Halloween for UNICEF. I would go to the nice section of town so I could peek into rich people’s houses and see what they looked like. I was a Girl Scout. I love to build fires and go camping. I still do. That’s not me, by the way, but that’s a reminder of them. I did go to Temple University. I was studying Social Work and had a client. I had to go into one of those homes. When you walked in there, you saw water coming down the stairwell. It was freezing in there and people were living in this situation.

I thought, “Why doesn’t somebody organize people to get together, clean up their own neighborhood and put things together. It was the beginning of my love for, “Let’s make something happen with real estate.” When I graduated college soon thereafter, we had a lot of unemployment and I ended up changing jobs every single year, every eighteen months.

My biggest fear still is when I retire that I didn’t want to have to work for Walmart as a greeter. Not that there’s anything wrong with working for Walmart as a greeter. In fact, they’re paying pretty darn well these days but I didn’t want to have to work. If anything, I wanted to go work at McDonald’s or any of those places because I wanted to have fun and meet people but I did not want to be unemployed.

Over the years, I’ve coached so many people and unfortunately, I’ve run into people that are homeless. If they had learned how to have a couple of rental properties, they would never have been homeless. I wouldn’t have been homeless. I lived in a two-family house and my partner at the time decided to quit her job. There was no money coming in or hardly anything else. Every Sunday night was spent calling all the creditors and saying, “I can pay you this week and I can pay you next week.”

Here’s what kept us in the house, though, without being evicted or foreclosed on was that we added the tenant and the tenant rent that came in was enough to pay for the mortgage. If you have 1, 2, 3, 4 tenants, it doesn’t take a lot, you will never be homeless again. If anything, that’s my soapbox to you. You can do this. I hope that you take advantage and take action.

This light bulb went off and said, “If you have tenants and apartments, you have residual income.” I used to sell insurance. It’s the same thing. I sold a policy. As long as people kept paying on the policy, I kept making money. You do the work once and keep on making money. In fact, I have properties up in Connecticut. The units, the tenants are getting taken care of and the money ends up in the bank. This was a friend of mine that came to us and he was working class. He is not making a whole lot of money.

REU Linda Baumgarten | Condos

Condos: If you think that you don’t have any money, there may be money available to you. There’s actually money everywhere.

 

He was able to buy one of these condos at the time for only $8,000. He didn’t have any money. I got a line of credit from my credit card. If you have good credit, look at the credit cards. You do have probably lines of credit, cash advances for 0%, maybe 2 or 3 points upfront and that’s it. You have 12 to 18 months to pay it off. Anyway, we were able to lend him the money to buy it. We were able to lend him some money to fix it up. He did that. Within a couple of years, he sold it. He paid us back at 12% and then he went and bought two family houses. That’s the American dream right there.

What’s So Great About Condos

I know these prices seemed cheap compared to what you can do now but I’m going to tell you a story in a few minutes about why that’s not necessarily. Let’s talk about what’s so great about condos. By the way since this is the Badass Women’s Summit, I do want to let you know my books are, Women are Simply Better. Men read them too, by the way. There are certain skills that we have as women, I believe, that can help us be successful in this business. We’re loud. We’re proud. Let’s share about it. My company is Ordinary to Extraordinary Publishing because I believe that every ordinary person is extraordinary.

Let’s take a look and see what’s the trend here. Who is living in condos? We got Baby Boomers because they’re ready to retire or are retired. We’ve got Generation X, 38- to 53-year-olds. A lot of Millennials are living in condos and post-Millennials. If you look at this isn’t this crazy? We always thought that the Baby Boomer was the largest generation but look how big these generations are. This is huge. A lot of these people are not ready to settle down. They may not have children yet and want to be able to travel a lot. Their parents want to be able to follow them around the country. A lot of these people are moving into condominiums.

Unlike self-storage, where there are only 50,000 self-storage units, that is 50,000 facilities in the country, which was surprising to me, we have 338,000 community associations. It’s a $1.76 billion value here. We also have community association management companies. I’m going to tell you a little bit about that in a minute about why that’s so important but there are 7,000 to 8,000 of those companies that help the homeowners associations manage themselves. That’s what’s going on there.

This is a big business. Condos are everywhere. I did this. I went to Atlanta. There are 1,049 condos and townhomes for sale. One of them I saw was only $200,000 to live in Atlanta. It’s pretty cool. They’re everywhere. Primarily people are looking for them near hospitals, universities and schools. They’re close to transportation. There’s so much building going on everywhere, just about anywhere you’re going to see these things.

This is what I like about condos, especially if you want to buy and hold them. I don’t have to mow the lawn. I did not have to shovel any snow at all. I don’t have the capital expenses or worry about the roof and the windows, those kinds of things that are expensive. They’re much easier to rehab. They’re easy to rent because they do feel like it’s your own home as opposed to an apartment especially if you get a townhome style. You’re going to get a better quality tenant, more choice of tenant because it does feel like it’s your own space and your own home.

They are easier to buy because they’re at a lower price. Many times, depending on how the market shifts, a lot of times you can get owner financing because when people want to sell, they may not be able to sell it at top dollar. You can negotiate with owner financing on them. You can buy them sight unseen. I don’t always recommend that but once you know the condo complex, you pretty much know what the design of them is, how well they’re taken care of and what their rules and regulations are. You don’t have to spend so much time doing a walkthrough.

You combine them anywhere that you want to and they are definitely less expensive than a single-family home for sure. The other thing is there’s less competition. Hardly anybody knows what to do with them, especially if you’re a wholesaler. A lot of wholesalers don’t know what to do with these. I’m going to share an example of that. They’re very easy to appraise. I’ll tell you about that too. You can set it and forget it. You’re done with them.

The other thing that’s great about condos and coops is the amenities. This is where I live in this complex and we have our own lake. We have access to three swimming pools and 4 or 5 tennis courts. This is a 2.5-mile loop around the lake that I get to enjoy with all kinds of nature. I can do this anywhere I want to. If I like to go skiing, I can buy something up there. If I want to go to the beach, I could buy one down there.

This friend of mine, Nicole, as a landlord found that she even forgot that she owned this one because the rent came in every month. When the roof leaked she called the HOA, Homeowners Association, and they fixed it. It’s much simpler than the multifamily houses that she owned. I spoke at a REIA in Long Island and this woman had said that she owned a unit in Colorado.
[bctt tweet=”When you have a community association management, it’s a much stronger and effective community.”]
When she moved from Colorado to Long Island, she rented it out to people who love to ski. By the way, depending on the rules for the complex, you could use these for short-term rentals. Whether it’s daily or weekly or maybe it’s for three months at a time. Definitely check with the condo association. A friend of mine bought one near Myrtle Beach. There were only five units in this house with condos. It’s a five-unit apartment building but they turned it into condominiums.

She’s renting them out as Airbnb and there was no problem with that. You do have to know this, though. There are good complexes and not such great complexes. You do have to deal with the board members. It is a people business. You do have HOA fees whether you want to or not. When you have your own multifamily house or any other business, you can budget it for reserves or not that month. It depends if you have money.

With an HOA, you have to pay those fees every month but you want to because that pays for the maintenance of the entire community. Sometimes financing can be trickier but it’s gotten easier in the last few years especially since 2019. You may not be able to rent them out and may or may not be allowed to have pets so you need to find out about that.

Step one is to find a unit. We’ve been talking about that. Meriden, Connecticut has 135 condos for sale. I showed you Atlanta with over 1,000. You could go on the MLS. You can use postcards and letters. We heard from a bright list broker. You can do phone calls and word of mouth and probably word of mouth is one of the most effective, especially if you like to rehab these. Once you get into a condo community, you can rehab it and then people will start to get to know you. They’ll tell you about other units in that same community.

Due Diligence

I do like postcards a lot because you can get them out there right away. They’ll throw it in the trash maybe but they won’t if they see the message. There are going to be more foreclosures coming up. You might want to be careful about the foreclosure because I made that mistake. I sent out letters to people in pre-foreclosure and this woman called me up. She goes, “Now, my postal carrier knows that I’m in foreclosure. How dare you do that? That’s a good point. Anyway, first you’re going to find the condo. If you send an email to my email, I’ll send you a quick presentation about some marketing strategies that I used.

Step two, do due diligence on the community. You want to ask a lot of questions. This is doing the due diligence of the community. As investors, we’re usually doing the due diligence on the property itself but first, we need to start with the community. These are some questions that you want to find out. You want to know how many units there are. You want to have something that’s large enough to have professional community management and personalities are not so important.

What are the condo fees? Are they comparable to what other people are charging? What do the fees cover? How has it been managed? All of them are managed by a homeowners association of your neighbors but is it professionally managed so that you have some backup for that? By the way, that’s become an important question for me. If it’s not managed by professionals then I’m not too interested in buying there. Is it approved by FHA or VA? If it is, it’s easier to get FHA-financed people to move in. If they’re not, it’s not as difficult as it used to be but that could be an opportunity for more creative financing.

A very important question, what’s the percentage of owner-occupied? You want to have at least 50% of the units owner-occupied. It will make the community a whole lot nicer, more stable and easier to finance. Are you allowed to have pets? Some of them will allow one cat, one dog but they don’t allow two dogs. These are the things you want to find out. Also, a very important question, what are the reserves?

As you get more into this, you can find how to find out how much is set aside for reserves from the community because it’s going to come in. You want to do due diligence on the unit like any other asset that you’re buying, estimate the repairs or what do you have to fix. What can you leave behind that you don’t have to do? What are the comps? Those are pretty typical of any other type of unit.

It’s important to avoid mistakes. This is an example that came up. A wholesaler sent me this. By the way, if you’re a wholesaler, hardly anybody wholesales condos for some reason. They’re afraid of them. They don’t know what to do with them. Remember that as soon as you put it under contract, own it, you have to pay those condo fees each and every month so you do need to know that.

REU Linda Baumgarten | Condos

Condos: With condos, you don’t have to mow and lawn. You don’t have to shovel any snow at all. You don’t have to worry about the roof and the windows. Those kinds of things that are expensive.

 

Anyway, I got excited because he sent me this one. He says, “This one is only $89,000. The rent is going to be $1,131. The after repair was $100,000.” Anything that cheap in the Atlanta area and that high of a rental rate got my attention. The after-repair value was not as high as I wanted for a wholesale price but if I was going to buy and rent it, the numbers would work. That was all wonderful and it looks very nice.

However, I did my due diligence on the community and found out they do not allow rentals. They would allow me to go in, fix it up and sell it but the numbers definitely don’t work at $89,000. That was a huge thing. This is a hint, by the way. I went back and looked at all the old advertisements for this unit or complex and also any rental ads for this complex.

That’s where I discovered that maybe I wouldn’t be allowed to rent there. I had to talk to the association to find that out. I negotiated and knocked off $19,000 off of this. I found out he was telling me, “It’s worth $110,000, $120,000. No problem. It’s worth about $96,000. You have to do your due diligence so that you don’t get stuck with something you don’t want. That’s okay. Once you have the training and the education, you can do it.

Exit Strategies

Step three is, what’s the best exit strategy? Do you want to wholesale this? Are you going to buy, fix and sell it? Are you going to buy, fix and hold it? Are you going to move in? This is a luxury unit that we did. We did a bunch of them in this complex. This was for 55 and older. This is for people that are making quite a bit of money. A lot of them are using this as a second home from Florida. We spent probably about $100,000 on renovating this one. It’s not for the faint of heart but it turned out well and we made a lot of money on it. You can do it that way too.

Step four is, where’s the money? Stacy was talking about raising money to buy $250,000, $1 million or whatever to do that. Number one is you can get mortgages these days. The FHA came out with rules in 2019 that make it a little easier and says, “Even if the whole complex is not approved for FHA, the unit itself could be.” A lot of these loans are Fannie Mae and Freddie Mac. You can get owner financing.

If the person wants to move, a lot of times you can talk to them about holding the mortgage for you. You could get private money. That’s pretty easy to do or you could get hard money. Hard money is a lot more expensive and you only want to use it for a short period of time. The good news is depending on the amount of work, you could get in and out in a month. Step five is my favorite, spend your newfound cash. What are you going to spend your money on? Always treat yourself to something but put most of the money back into your business until you’re able to build your business. Do something to celebrate.

Community Association Management

What’s a condominium? A condominium is strictly a legal definition. In the more detailed training that I have, you’ll see that many buildings all look alike but the difference between an apartment building and a condo is that it’s a form of ownership created by state statutes. It establishes co-ownership and community property. As the owner, I own the air rights of my unit but I may not necessarily hold title to the land underneath. I don’t own any land here except by percentage of the entire space.

I own everything from wall to wall and ceiling to floor within the unit. That means I can do whatever I want within it and whatever construction laws allow but I can paint it any color I want to, for example, as opposed to a coop, where you are a tenant inside of that. Coops can dictate what you’re allowed to do. I own a percentage of all the common areas based on the percent ownership within the community.

I have two bedrooms here. I own less than somebody who has a three-bedroom. It’s all dictated in the condo documents. You want to become familiar with the condo documents for that community before you buy it. You want to know what the common areas are. Whatever you think a common area would be, it is the common area. The only difference is limited common elements.

What this means is the common element belongs to the association, however, I’m the only one who has access to it. For example, I have a back open porch and a screened-in front porch. The association paid for painting and power washing. However, I was responsible for the contract and negotiating all the power washing and painting the porches. I’m responsible for taking down the screening and putting the screening back in. I was assessed $300 for the individual paint of the front porch because I’m the only one who has access to it.
[bctt tweet=”You have to do your due diligence so that you don’t get stuck with something you don’t want.”]
They made the contract for the entire community and I have a small assessment to take care of that. You want to know what that is for yourself so you know what you’re talking about. Most important is the homeowner association and this can make or break your community. If you have an effective homeowner association, everybody gets along. The property is taken care of and you can live there in peace. If they’re fighting with each other, that could be an issue.

My biggest issue was assessing the right amount for your homeowner fees every single month. If you don’t get charged enough, you won’t be able to maintain the property. How do I know that? It’s because I’ve owned both types. The association is responsible for management and maintenance. However some places have community association management and that’s a professional property management association that supports your homeowner’s association.

For example, I talked to you about doing a contract to paint all the front porches. The homeowner’s association was the only one that was allowed to write the check. They were the only ones to approve the contract but the community association management is the one that puts out the bids because this is what they do 40 hours a week. When you have a community association management, I feel like it’s a much stronger, more effective community. One of my students owns two units in a complex and when they brought in new management, everything went a lot better.

I always recommend having two exit strategies. If you can both rent it out and sell it, that’s going to be even better. If you can wholesale it then sell it so that you can have two strategies. There’s a lot that goes into deciding what the best one is for you. Most of the teachers here are transaction engineers so they know how to do multiple strategies. That’s the place that you want to be in so you can make money with any lead that comes through.

Let me get into some case studies to give you an idea about this. This is a seller finance deal that I did. This is a three-bedroom, one-and-a-half-bath condo. That realtor friend of mine called me up on a Saturday night and this is where he took me to. At the time, I don’t know and I passed on it. Who knows why but years later, the whole community had gotten cleaned up and it was a nice place.

It’s a rental bread and butter area and the seller had two big problems. One is he had a tenant who was not paying anything. It happened to be his ex-girlfriend and he wanted to get married. His fiancée says, “You better sell this thing or we’re not getting married.” I met him. I didn’t want to use my credit for a small loan so we offered to take over payments plus I paid him a little bit more for the first year on top of that. He left his mortgage in place. I made payments every single month. We did that for a couple of years until I paid off that loan.

During that process, everything was done by email and phone calls because he lived halfway across the country. I had to build a lot of trust over the phone. I helped him evict the tenant and hired the sheriff. I didn’t pay for the attorney. I gave him a couple of attorneys who advised him through the whole process. I helped them evict the tenant because he’d kept feeling bad for her. The nice thing was it already had a new kitchen flooring. He had already put all this money into it.

I thought it would rent for about $1,000. These are the numbers. I bought it for $46,000, which was almost the market price at the time. I think it might’ve been worth around $52,000. If you’re buying and holding, you’re looking at cashflow. There’s no money out of my pocket. It cost $2,000 to do some minor repairs. I was able to rent it within two weeks for $1,250 so $250 more than I thought.

Plus, she pays the water bill. I rented it for $1,275. The same tenant has been there ever since. She plans to be there for another six years until her youngest graduates high school. This was definitely a win-win-win on this whole situation. I hardly ever have to do it. It started off as cashflow being $550 a month. By the way, the fees on this are over $200 to $1,200. It’s been a very consistent and well-run complex.

The other hand for me is that it does not have a swimming pool. A lot of people in the south where you have to have a swimming pool but if you can avoid that, it’s a big expense and liability for insurance. You can save a lot of money and keep your condo fees lower if you don’t have to do it. That’s why I do that.

REU Linda Baumgarten | Condos

Condos: If you have an effective homeowner association, everybody gets along nice. Nice property is taken care of, and you can live there in peace.

 

Why do we love wholesaling? If you don’t know what wholesaling is, it means putting something under contract at one price, assigning that contract with somebody else and making money in between. In this case, I met a wholesaler and she told me about this story. The owner here was an accidental landlord. In other words, he used to live there. He rented it to a friend, the friend moved out, the new tenant came in. They didn’t pay rent and destroyed the unit. He was totally upset. Now it was vacant and he definitely wanted out. She was able to put it under contract for $45,000.

What she did was unique. She found cash buyers for the people who have bought for cash in this particular community, with about 100 units and communities in the neighboring area. When you’re buying in a particular complex, it saves a lot of money on your marketing because you’re only looking for certain addresses. She was able to assign the contract to somebody for $55,000. She made $10,000. She gave $3,000 to the realtor who brought her the buyer and then she kept the rest of it. There is no money out of her pocket.

Rehabbing is where I found that a lot of people have the HGTV bug. They want to buy, fix, sell and make it look beautiful. Many people that I found their first rehab deal was a condo because you could do it so quickly. These are students of mine. I gave them two weeks to finish this. They put it under contract. They bought it. It was a small unit with two bedrooms. It has a garage underneath. They renovated and marketed it for two weeks sold it to a cash buyer and made $10,000. It’s not bad for six weeks of work. I liked that they have a calendar so you’re very organized and you stay close to your scope of work.

Basically, in the bathroom, they put in a new light and added a mirror to make the bathroom look bigger. They did some niceties in there to make it look pretty. That’s all they had to do there. There’s a teeny-tiny kitchen. It’s not even a kitchen. They put some cabinet drawers in there and had to fix some of the electrical to bring it up to code but left the white appliances because white in that small space keeps it wide and open. That’s all they had to do there. In the main living area, they had replaced the carpet because it stank, they fixed the walls and made that look nice.

They use a lot of simple lighting. I think this furniture came from a rental place, Aaron’s Rental, which they have everywhere. They have a program for staging so you can rent these out to stage your units. I’m a big believer in staging. I think it sells more and helps people see the use of the space. I know a lot of people disagree with me. This one is important because you can’t sit inside the kitchen so you want to show the space where people eat and enjoy life.

This is a luxury that we did. There is a living room and a galley kitchen. They were back-to-back. We tore down the wall that separated the living room from the kitchen. We had to have support beams and make the building look gorgeous like that. This was a trick that we had. We had to make sure there was enough room to have the dining table here and be able to have the chairs move in and out and still have this beautiful island there. There are a lot of things that we did on that one.

You can use a lot of alternate financing that I wanted to tell you about. This was a woman who bought three condos. She found these on Craigslist, by the way. She was in class with me and all of a sudden, she went, “Eureka, I found this property.” It was three condos. Lots of people knew about this one and the owner hadn’t paid property taxes and condo fees in three years.

They were fully rented. Through a lot of training in negotiation, she was able to negotiate with the HOA and with the city to get into these units and pay them back over time, which sounds impossible but somehow, they made it happen. In the first three years, she didn’t make any money but did get the depreciation on these because they are real property. You can depreciate the real property over 27 and a half years. She paid them off in three years and now it’s a cash cow. She didn’t have to do any work at all.

As the tenants moved out, she might put new paint and carpet but that was it. This was 55 and older complex. This was her first deal. She met her first business partner through REIA. They bought it as a bank-owned property and there will be a lot more coming up. Keep your eyes and ears out for them. She was able to buy it for $20,000 less than the first offer that she put in.

The bank should have accepted her first offer. They were able to sell it in three weeks but the buyer couldn’t come up with the money or something so they sold it a second time for $20,000 more than the first offer they got. The point is she was able to buy this. She used hard money to buy this thing. This also was their first deal with her two friends. They use her IRA to buy it. This is something that you need to know when you’re rehabbing. They were not allowed to remove the windows. They took the glass out and put new glass in. They were not allowed to change the door color.
[bctt tweet=”Grab the opportunity to teach and help others.”]
I can’t remember if they were not allowed any pets at all, one pet or something like that. In the lower level of it, they added half a bath. They did the comps on that community and found out that units that have one-and-a-half-baths sold for at least $20,000 more than those that didn’t. They took this ugly, lower space down downstairs right next to the garage and transformed it into a half bath.

They also had a washer and dryer down there. It was on the lower level so they had to get a special pump to pump it up to meet the sewer and all of that. They did it with the city. This was this gentleman’s first slip and he bought this at an auction. I don’t normally recommend that you buy things at auctions unless you’re able to walk through it with somebody who knows what they’re doing. He bought this one through a foreclosure auction.

When he got in there, he called me up. I was 3,000 miles away and said, “We got a problem.” I said, “What is that?” He said, “There’s this big split in the basement of the cement.” It wasn’t a big problem. He bought this one with private money. We rehabbed it on a credit card and went to the condo association. They were well aware that there were settling issues with many of these units. They fixed it to their costs for $23,000.

The challenge was that it did delay our ability to sell it but it did sell in ten days for top dollar as soon as he did it. There are brand-new stainless-steel appliances. He painted the cabinets to make it a nice, bright white, did a couple of other things and that was it. Condos are easy to comp so that’s good and bad news. It’s good news because then you’re going to know what you can sell it for. The bad news is you cannot jack up the price because you feel like it. They’re so easy to compare.

When appraisers have to use at least one comp within that same complex, each complex has different model names. I think I live in an Oak style, for example. They have different styles. You want to know what that style is. Those are defined in the condo docs when the property was built. For example, in the luxury complex that we were in, the two models were very similar but they were different models. One was a lot more popular than the other one. You need to know that when you go in there so that you don’t overprice things.

This is another first deal. This woman had spent $50,000 on a coaching program and never got started. She came and started working with us. She bought this first condo with her IRA. She works full-time. If you’re working full-time, condos are great because you don’t have to shovel snow. She didn’t know anything about construction like me. All she had to do here was put new carpeting, linoleum and paint. It was rented for $1,025.

She bought a second one in the same community and that’s when we found out that they switched cams for that community. A lot of the nitpicky things were getting better and better for that community. Now she owns four condos and is on her way to financial freedom. I want to remind you that if you go to WomenAreSimplyBetterAtIt.com, it will take you to my Amazon link so you can get a free copy of the pink book, Why Women Are Simply Better at Real Estate Investing. The second book, the purple book, if you’re a Kindle Unlimited person you can get it for free or you can invest a few bucks in that book. It covers A to Z on how to invest in real estate.

Please give me five-star reviews. That’s all I asked for because the more five-star reviews I have on the books, the better it is for me to reach as many people as possible. I do have a short little presentation on how to find your next deal in the next 30 days without spending any money. If you send that to me at OEPublishing@gmail.com, I can send that back to you. That’s it.
 

Important Links