Hey guys. It’s Kyle McCorkel with Safe Home Offer.
I wanted to talk to you today about what is a real estate investor? So you probably hear people talk about a real estate investor, but I really wanted to just put a definition to it. So to me, what a real estate investor is, is a person who wants to buy a property and improve it. Put money into the property, make it a better house or a better building. And then they want it to be worth more than what they put into it. And so that real estate investor will hold it for a certain period of time. If it’s a short period of time that they hold it, and that’s what you would probably think of as a fix and flip. So that’s what probably what most people think of as real estate investors is.
TV has all these shows of people who are going to fix up a property really quick, and then try to resell it and make a profit. So that is one type of real estate investing. And then the other type of real estate investing is investing in rental properties. So that’s what we as real estate investors call a buy and hold property. But the general concept is the same as that. You are buying a property, you’re putting money into it to fix it up with the hope that it’s going to be worth more than what you initially invested in it. So I’m going to be going around checking it in on a couple of properties today. So I’ll show you an example of a fix and a flip, and I’ll also show you an example of a buy and hold property.
Fix and Flip Example
All right guys, I’m here. We’re at our fix and flip example. So this is a single family home, just a nice little single family home. We purchased a couple of months ago and we rehabbed and we’re going to actually be selling it in about two days. So let’s go inside. I’ll tell you a little bit more about this house. All right. So inside this fix and flip house, we’re selling it in two days. So just to give you some examples for what I was talking about with real estate investor just basically trying to buy at the right price, put some money into the property and then have it be worth more than what we put into it. So for this one, it worked out. It was worth more than what we initially invested into it.
So for this property, we bought it for 95,000. It did not look like this. We absolutely tore down some walls and opened up the layout here. Put in a brand new kitchen that you can see behind me. Including all the closing costs for buying, closing costs for selling, the holding costs, the rehab, labor, and materials, and just other miscellaneous costs on the project, our total costs on top of what we paid for is about 75,000. So we paid 95. We invested about 75,000 and then we’re selling it for 195,000. So we are going to make a profit on this. Spent several months really fixing this place up and making it beautiful. And this is your example of a fix and flip property.
Buy and Hold Example
All right. So now I’m about two minutes away from that last fix and flip property. Now I wanted to show you guys an example of a buy and hold property. So this is a three unit building. It is still very much under construction. So I’m going to try to stay out of the way of some of the guys that we have working here. But let’s go inside, I’ll tell you a little bit more about the property.
All right. I’m in one of the more finished units. There’s two units on the other side that we still have some guys working in. Like I said, this is a three unit property. Our plan is to hold it as a rental property. We purchased this for 175,000. It is a long rehab. All in all, it’s probably going to take us about a year to complete. We’re about nine months in right now. We don’t know what our total costs are going to be, but including, like I said before, the closing costs, the holding costs, the labor and materials, other miscellaneous costs. We think we’re going to be investing about 175,000 into it.
So we bought for 175,000. We think we’re going to put in another 175,000, and then we expect it to be worth about 375 once it’s done. And then we are going to keep it as a rental property. Then we’ll go through finding tenants and managing the tenants and so on. But again, it’s the same basic concept where we’re buying a property. We’re investing a lot of money into improving the property with the hope and the plan that it is worth more than what we put into it. So there you go. That’s my definition of what a real estate investor is along with some examples of a couple of properties.