Sue,
Good job ! It sounds like you are doing the footwork and it will pay off ! I would get comps from the area and know what has sold,how much,etc. Decide what You want from the property, quick re-sale, hold to rent, or retail sale after fix-up ? Get and figure repair estimates (try not to under estimate work needed). Then do some math, If offer 69K and spend 15k fixing is it still a 100k house ? Figure your time, energy and money is working, how much do you need to net ? Maybe you can offer 60k and turn around and wholesale the house to investor and not do any work? Or how much could you rent, cash flow after debt service and expenses might be nice ? It does not cost anything to offer a lower price, Do some homework and you may have a great property. You can and should have “subject to” clause, it can give you a chance to either shop the property to other investors or re-affirm comps or pay for apprasil report. Carpe Diem !
Neal
I looked at a house tonight in a nice small city neighborhood. The other homes are going for about $100k.
The house was listed for $90k but is now $69,900. It may be due to divorce or somethng, I’m not sure. It needs cosmetics but has a new kitchen and the bathroom fixtures are good. Some of the walls need fixing and its lathe and plaster. It needs a new oil heater. It’s overgrown with shrubs and trees, etc. I have someone coming tomorrow to give me an estimate on repairs. The outside needs painting and the porch slants. I think $69k is too high for me to make a profit. I’m afraid it may sit on the market and I’ll end up losing money. The area is basically good but the house next door is a duplex and may detract from it. I want to talk with the neighbors and get the bigger picture. I’ve never done this before and the fears are becoming reality now. Any advice??? Sue from NJ
Sue,
Great job. Killer deals in small towns don’t last long. Tie it up today, subject to your inspections. THEN, get the inspections for repair estimates, etc, and do your due diligance. If the repairs are over about 10k, negotiate a better price based on the “excessive repairs”, unless you want to keep it for a rental or to live in. If so, then you can go a little higher. I would recommend leaving about 20K minimum after repairs for holding costs, cost of resale and profit if the house is worth 100K or less. If you don’t have that much room, you might wind up not making any money. If you reduce this number(20K), in my opinion, the risk factor goes way up.
good luck,
BillW.