Cathy Manchester

Norway, ME Years Investing: 5 Number of Deals in 2004: 6 Career Deals: 20

Units Owned: 22 units and 2 raw land

Areas of Expertise: Fix and flip; residential rental; and seasonal rentals

Real Estate License: Yes

Every investor tells the story about his or her favorite deal. The crown jewel in Cathy Manchester's portfolio is the four-bedroom, two-bathroom oceanfront house with the boarded up windows. The house had gone under contract almost as soon as it hit the market, but the owners didn't want to let anyone do inspections, and so it just sat.

Manchester didn't care. She knew from the location and the size that it was a pearl waiting to be snatched up. She immediately bought it for $499,000 and put $20,000 into rehabs. After the renovations were completed, Manchester began renting out her beach house for $4,000 a week during the summer. But what made the deal even sweeter was that the house was appraised for $750,000, which created a wonderful opportunity to leverage the equity.

"The best part is, I not only have a house that brings in substantial rent during the season, I've got access to a $250,000 equity line," Manchester says. "I use this equity line like cash to buy other properties and flip them."

Manchester swears by equity lines. First, they're fast: no loan approvals, no appraisals, no paperwork. On top of that she saves thousands of dollars in closing costs and fees. Of course, Manchester knows this strategy isn't appropriate for every deal.

"If I'm going to hold a property a long time, I'll get a mortgage. If I'm looking to flip it for quick cash, I won't," she says. "There's no sense taking out a mortgage and paying $2,500 in closing costs and doing all that paperwork if you're going to flip it in less than a year."

The equity line is just one of the creative ways Manchester leverages her properties to squeeze every bit of revenue out of them. For example, she bought a six-unit apartment building that was underutilizing its downtown parking lot. Instead of pushing rents to

Cathy Manchester Realty

their maximum—many of the tenants were elderly and couldn't easily afford it— she concentrated on renting out the 18 underutilized parking spaces for $300 a year each. Another creative move was helping an investor buy an ugly, dated house that no one wanted even though its oceanfront property was gorgeous. She helped the investor buy the house for $270,000 and gift the structure to the fire department for a total tax write-off. Once the fire department had finished its training (which meant they burned it down), the owners cleared away the debris and sold the empty lot for $360,000.

"I just find properties where the numbers aren't great and figure out ways to make them great," she says.

Manchester says her real estate license helps a lot in this regard. Simply taking away the commission, for example, makes flips with slim profit margins a lot more appealing.

"I just bought a single-family house for $142,000 and will sell it for $165,000. Hopefully, I'll do it with no real estate agent other than myself, and of course I bought it with my equity line," she says. "Now, for an investor it wouldn't work. But with no commission and no closing costs, I'll make about $13,000, and for doing nothing other than shuffling some papers around, that's a very minimal risk with a great reward."

Manchester stresses that it doesn't take a license to get the good deals. As an agent, her first priority is helping her clients find the deal of their dreams.

"As an agent, there's nothing better than helping your investor-clients make money," she says.

Manchester says that investing is not all that hard. Her 18-year-old daughter, for example, bought and sold her first property (raw land) for an $11,000 profit. She put that into a condo, which she plans to update and sell for a profit a couple of years down the road. "So here's a young kid who is doing deals while in college," she says. "So it's pretty easy once you focus on doing it."

These days Manchester's life as a successful real estate agent and investor is worlds apart from the 15 years she spent as chief of police in every way but one: she still gets to help people.

"I was really concerned when I got into real estate that it would all be about the money and not about helping people," she says. "But it wasn't! I was totally blown away with what a difference we can make in people's lives. That's what hooked me."

Real Estate 101

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