As we discussed there are generally three exit strategies for distressed real estate. 1) buy, repair then re-sell either quickly (to a cash or hard money buyer) or after three months to a traditionally financed buyer. 2) buy and sell quickly to another cash buyer. 3) buy, repair and rent to a qualified renter.
A property we currently have under contract at Rehab Deals California is; 13200 Gina Avenue, Moreno Valley, CA 92553, is a perfect example of exit plan number three: buy, repair and rent. It is $65,000 for a 3 bedroom, 2 bathroom that needs mostly cosmetic work: carpets, paint and some other repairs, landscaping and some fence work for the exterior. The total estimate to fix it up to rent is a maximum $5,000. So the total cost to have this property rented out in 30 days is $70,000.
The comparable rent for the area is $750 per month. This house would easily qualify for Section 8 housing and so the government would guarantee some of the rent. In Riverside County there is a 40,000 person waiting list to find this kind of property so it would rent fairly quickly. It would be wise to investigate this further when following the buy and hold route.
The yearly net income before expenses would be $9,000 a huge 13% yield. That return on investment doesn't include any future appreciation in value or increases in rent.
Watch the video on 13200 Gina Avenue:
