Sue, I think the damage could be quite extensive. My next step was to get an inspector in there and tell me what it would take to get a certificate of occupancy, or whatever the city would need to deem it inhabitable again.
When you say I need to get it for 70% FMV less profit and repair costs, I figure the most I could pay would then be around $35,000, assuming $40,000 in repairs, and $5,000 for me.
Maybe there is no deal here. What do you think?
I don’t know what the ins. co. gave him. I’m under the impression he wants his asking price over and above what they settled for.
Thanks for your help.
JTodd
Here’s the deal…
The owner of this house owns it free & clear. Had a buyer lined up and two days before closing the house suffered a fire. Was going to sell for $108,000. It’s a three family, but the first floor can be zoned for commercial. I spoke to the woman who was going to buy it before it caught fire, and she expressed an interest in it, if it were fixed up. She would put her store on the first floor, live on the second, and rent the third.
The current owner lost heart, and does not have the money or time to fix it up. Was asking $66,000. I got him down to $55,000 cash, but think I could still get him lower. He has received his check from the ins. co.
Comps in the area go from $110,000 to $120,000. When I say comps, they are three families, not w/ a commercial zoning on the first floor.
Being new to this, I don’t want to get into retailing this one. I would just flip it to someone more experienced who would do the rehab.
My question is:
1.) Is there enough spread here to make rehab, holding, and my small cut worth a deal?
2.) How do I find out more about a 203K, and is it advisable to sell it on this type of loan in this case?
3.) How else might I structure this deal?
The only way to answer you questions is with some info about how extensive the damage was and the cost to fix. If you can get it for under 70% of FMV less rehab less something for yourself, you’ll probably find a rehabber to flip to at that price. But you’d need the cost to fix to learn that number.
BTW, how much did he get from the ins. co? in other words, how much of his price did he get already?