Hidden Profits In Resort and Lake Real Estate
by David Whisnant
As many of you that keep up with my real estate investing site know, we were
fortunate enough to buy a property at Jackson Lake near our home in Atlanta for
a second home. What I did not realize before I started toying with the idea of
looking at this type of real estate was the immense profit potential that resort
or vacation properties hold. This point was further driven home to me by a
student who is starting to successfully work the condo market in a resort area
on the east coast. He and his wife have bought and sold several of these
properties in a very short time frame, and the profits are over $40,000 per deal
with little if any renovation/rehab! Sounds like a nice way to buy real estate!
Resort / Vacation real estate can make some great profits for several reasons:
- This type of real estate is generally by people who live some distance away from
the property.
- There is a high likelihood that this real estate is not used much anymore
because the owners do live so far away, and is thus an unwanted expense in both
time and maintenance for the owner.
- The owner is not able to necessarily fully keep track of the rate of
appreciation on his or her real estate. Furthermore, with the decline in the
stock market of the last year or two, many more dollars have been flowing into
these types of properties making them rise greatly in price. Even if the owner
knew the market value two years ago, that may be very low in today’s market.
This type of real estate is more liquid than in the past because of the demand
for them by owners.
- The properties are vacant, and not full of people’s best furniture, so the
owners are more likely to be willing to allow you to option the property or
lease/purchase it with the right to access it so that you can show it to
prospective buyers.
- Your buyers will not be as picky on cosmetics or other common owner occupant
issues because it will not be their primary home.
To give you an illustration of how you can literally buy real estate like this,
even at full retail, and create immediate substantial profits, I will walk you
though my personal deal on our lake house.
We purchased our property at a discount from the appraised value. The property
was priced in-line with other one-bedroom properties on the lake. I know what
you are thinking -- who would want a one-bedroom property?!? Not me! Not with
two kids, two dogs, a wife, inlaws and friends. A little too many people in one
room for me. What is unique about this property, and several others that I have
seen since I have been following this market, is that this one bedroom house was
actually very large, approximately 1300 square feet. What I saw was that it
could easily be cut into a three-bedroom house for a thousand dollars or so,
which would raise the price some $50,000 at a minimum. Thus, some of these
properties can literally be turned from one bedroom to three or four with some
new walls and doors. Walls and doors are cheap.
We had pondered selling the house after cutting up the rooms, but have decided
to keep it and make it a base of operations to find other similar properties
that we could work with. We are implementing the following system to make money
while we are riding around on the boat and enjoying the water:
- Get a recent list of comps from a local realtor for recent sales at the lake.
Drive around and look at these to learn what areas of the lake sell for more
etc. A market like this can be learned in a day.
- Write down the address of each property that we see that looks neglected,
overgrown, or in need of repair. (The address must be posted on the docks by law
on our lake).
- Write the handwritten letter in our course to each of those owners.
- Call to follow up with those owners. If they do not respond to my letter.
- Ask if they are willing to sell, and if so what their best price would be?
- If too high, ask if that is the best price that they could give on this real
estate.
- Propose an option/lease option or a straight purchase to acquire the real
estate.
- Market the property through newspaper advertisements and signs on the dock
facing the water.
If you have trailers on nice lots, the “break up and liquidate” strategy is also
something you should consider. Speak to several used trailer companies and
advise them that you are acquiring some lots at the lake with trailers on them
and would be interested in selling the trailers so that you could do new
construction on the lots. Ask them what they are interested in and the prices
they could typically pay for single-wides, double-wides, or triple-wides. We
have been given a general number of $15,000 for a nice double wide. They will
come out, take it, and cut you a check the same day. If you can find a lot with
a mobile home that is priced for the land only, might it make sense to sell the
home and sell the lot after the home is removed? This could be an easy $15-20k
payday even paying near to full retail.
In closing, this is a neat market that really is primed to be lucrative because
of the current economic situation. People are buying this type of real estate
like never before, and owners often do not know what they really have because of
recent appreciation. I would urge you to consider this strategy as something to
work into your real estate investing tool kit. I would urge you to especially
look at one bedroom properties on the market, even listed ones, and see if you
can break them up into more bedrooms which will give you a huge immediate profit
with little effort or expense. This market is not small. We saw several other
properties that could have been cut into more bedrooms like the property that we
bought, but the water as deeper and wider where we purchased. If you are buying
lake property, and cannot decide between two properties, deep-water properties
always sell faster and are worth more. You can get a topographical map of any
lake to see where these lots are. I hope that this new source of real estate
deals will be lucrative for you!
Bio:
Dave Whisnant is an Atlanta investor/attorney who is dedicated to helping people
land their first deals and create whatever level of success in real estate that
they desire.
After successfully building a real estate law practice, Dave walked away from it
to focus on real estate when he saw the profits that his clients were making.
Jumping in with both feet, he created a proprietary model that rocketed him to
the top of Atlanta investors almost from day one.
Dave is different than other investors in his single-minded quest to perfect a
series of cutting-edge prospecting tactics to locate and then land motivated
sellers who other investors are not even aware of.
A master investor AND teacher, Dave’s precise and easily duplicated systems have
been successfully implemented by his students around the country in competitive
markets of ALL kinds.
He believes in freely sharing his expertise and information for the benefit of
anyone who is serious about succeeding, and believes that his techniques will
create more success stories per student than any other real estate investing
coach in the world in 2006.
Real estate investing has enabled Dave to have the freedom that enables him to
spend time with his two young daughters, wife, and “herd” of golden retrievers.