[Zeke]

I just completed my small part of a $35,000 rehab job on a 75 yr. old 2 br, 1 bath Spanish syle stucco bungalow here in Long Beach. While the rehab was planned when the market was hot, by the time the contactors got to the work and it was completed, a total duration of about 4 months, the house lost more value than the rehab cost.

But let's look at another case first: Same style house purchased by a real estate broker/contractor in November of last year and needing the same amount of work for $450,000 (I thought he was crazy). Same neighborhood, mine.

But he puts more into the house like a new kichen and a new bath totalling $80,000 The next door neighbor bought it for $600,000 before it was done. This would have been in June, they moved in in July.

Lets look at the numbers.

$450,000 minus his share of the commission is approximately $437,000. Now plus the 80 K, he is into the house for $517,000.

A profit of $83,000 in a little more than 6 months. And he hit a home run because he sold his own house before listing it with his own company.


Now let's look at the numbers on the first house, finished yesterday.

Value of house (and appreciating) in June as a fixer, $500,000

Today's market: Yet another same style/size 2br/1 ba Spanish house in good condition is sitting on the market unsold for $459,000.

Equity loss in 4 months plus rehab costs, $76,000.


The profitable house was done by a pro. The recent house was done by a greedy private party.

The market is still falling. This is why you have to know what you are doing when investing in real estate.