I met the father of one of my clients this week. He is retired, from a profession that is a little notorious for not providing well for retirees. He shared a story with me that he said I could repeat, so here goes.
At age 50, he woke up one night with the realization he had no retirement set aside. It was so frightening, he immediately set out to do something about it. He found an old fixer upper house that he thought he could handle, and scraped together the funds to buy it. He then did all the work himself to put it in good shape. Today, the house is paid for, and is still generating monthly income for he and his wife.
The first house went so well, he bought a 2nd, and with some good negotiating, he was able to not only buy a bank owned home that had been on the market forever, but also got them to help him with some of the out of pocket costs of fixing it up, such as getting a furnace and air conditioning (the home is in the south). While this house isn’t paid for, he has lots of equity in it, and it is generating nice income for them.
He was so grateful he had done something when he did. He now thinks in terms of helping his kids and grandkids through financial challenges they are facing, knowing he has provided for he and his wife. The strategy he used was the concept of ‘fix and hold’. Not ‘fix and flip’. Buying homes that are undervalued because they need work, turning them into nice homes, and renting them to people who need a place to live, and getting them paid off in the process. Sounds like a plan to me!
While he did this in another state, this strategy can work in the Colorado Springs real estate market. Our high population of active duty military makes for a very active rental market (lots of demand). While we don’t have tons of homes sitting around waiting to be fixed up, there are enough of them to make it worth the effort. Funds for investors to do the fixups are not as available as we’d like, but resourceful investors are finding ways to get it done. And with interest rates so low, the loan servicing costs are amazing for the long haul. And with prices so low, the odds of experiencing appreciation in the future are high, hopefully allowing you ride off in the sunset with some money in your pocket.