[Big Ed]

I've done 4 of these in the last 3 years...here's my thoughts in no particular order.

1. Price levels even for fixer uppers are very high right now, I don't have any current projects because I believe market risk is too high (e.g. prices may drop while I'm renovating).

2. Don't forget carrying cost! The killer to many such deals is the cost of the debt service while undergoing renovations and marketing for resale. If the resale isn't fast, your profits can be vaporized.

3. The deals where there is money to be made are usually much more involved than paint & flooring (and much north of $15-20K rehab cost). Usually the first time buyers will scoff up those places that need only cosmetics..and at a price that's higher than makes sense for an investor.

4. When you identify a potential property, be sure to speak to your local building inspector before the deal is finalized. One recent deal I did that involved significant repairs I had to bring all electrical up to current code...which was fine, though my initial plan was only to upgrade an old fuse panel. Local guy said if I was doing "significant renovation" I couldn't just do the panel.

5. I wouldn't personally buy a property for 300K if I expected to put 20 into it and sell for 350..after debt, sales charges & market risk, that's not enough margin. YMMV.

6. Make sure you know what the market value of the property will be after your renovations...work with a Buyer's broker or appraiser (key is they work for YOU not the seller) to have a handle on this prior to the deal. DO NOT BELIEVE THE LISTING AGENT WITHOUT INDEPENDENT VERIFICATION.

7. This one was my key to any rehab I took on. Make sure that the price you pay STILL MAKES SENSE if you have to rent the property. This was my escape hatch...if the market went bad while I was renovating, I wanted to be able to rent it at no worse than break even on a cashflow basis. This way I wouldn't be hemorrhaging money or be forced to sell at a big loss.

Also, I'm a real estate broker so I was able to sell my properties at half the commission (only paying the buyer's agent). That helped. I made money in 3 out of 4 deals...the 4th it took me too long to renovate the place and carrying costs killed me.

Feel free to ask any questions you might have.