Think you can’t make any money in the real estate market, anymore?

You can, if you’re clever.

Case in point:

MLS # 70694994, 1091 Boylston Street, #3, Boston, MA 02215

Rob Cohen of Century 21 has this listing. It’s a 351-square foot (+/-) studio that just came on the market for $219,000.

From the listing in this weekend’s Boston Homes:

2 room studio, complete 2008 renovation! New hardwood floors, stainless steel refrigerator, paint, tile, sink, cabinets, more. Perfect investment, dorm alternative, first home.

And, based on the photos in MLS, it does look like they did a really nice job on the renovation.

In a very short period of time. The public record shows that the property was bought, in December, 2007. For $150,000. (The previous, previous owner did pretty well, himself. The public record shows he bought it for $69,900 in 1999.)

So, let’s do the math.

Investor buys property for $150,000 in December, 2007. Puts in $10,000, maybe $15,000 in renovations, within a month. Puts unit back on the market one month later, for $219,000.

Suppose the owner has to come down – that a buyer offers $210,000.

Okay. The owner has to pay commissions on the deal – at 5%, that’s $10,500. That leaves the owner with $199,500. Pay off the existing loan of $150,000, ends up with $49,500. Pay off the cost of renovations of $15,000.

Leaves the owner with $34,500. In the space of two-three months.

The owner will have to pay short-term capital gains on the profit, but most likely will do a 1031-exchange and put the money into his next investment property.

Everyone wins. Previous seller. Current seller. Buyer (who gets a brand-new home).

Oh, and of course the real estate agents.

(I’m sure I could negotiate them down to $200,000 …. let’s try, at least.)

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