Posted by Dons on December 06, 2006 at 18:35:31:
I have bought good deals from the MLS when the Reator I use researched the buyers to see how motivated they might be. Generally the MLS is full retail, but sometimes you get lucky.
A question I have though is…does the house have a ground lease or is the land included with the purchase?
Ground leases are more common in HI than most of the mainland. Gradually people are buying out the ground leases in HI and attaching the land ownership to the buildings, but it’s to be considered.
Is there a deal here? - Posted by Nathan(HI)
Posted by Nathan(HI) on December 06, 2006 at 13:41:29:
I found a 2/1 house, on Oahu, asking price $465,000, taxable value of 543,000, so is has an assessed ratio of 85%. I haven’t seen the inside/don’t know how to guesstimate repairs, so I have no idea what the ARV would be.
My plan would be to get a neg-arm loan, have the seller credit me for closing costs and repair money, and fix the place up, rent the place out and refi to a 30 yr fixed after repairs. I figure if I can buy the place for under 430k I will have atleast a 20% discount.
Any and all ideas/advice appreciated, thanks!
Surf City on Oahu? W-I-P-E-O-U-T-! - Posted by Don (VA)
Posted by Don (VA) on December 06, 2006 at 14:55:19:
It doesn’t have an assessed ratio of 85% (whatever that means). Nor does it matter. You don’t know what it’s worth now. You don’t know what it would be worth fixed up. And you don’t know how much repairs are needed.
Since you don’t know how much it’s worth (as is or fixed up), you have no idea what it’ll appraise for. Thus, you don’t know if there’s enough room there for the seller to credit you closing costs and repair money and still have the house appraise.
Since you don’t know what it’s worth, you have no idea how much you’d be able to refi for…or even if you’ll be able to do that. And even if you did, you don’t know what the rents are, and whether you’d have a negative cash flow.
You figure you’ll have a 20% discount if you buy at $430,000. Is that 20% under the $543,000 assessed value? But the assessed value is irrelevant; the important values are pre-rehab and post-rehab.
Further, a common rule of thumb for rehabs is to pay no more than 70% of FMV minus fix-up costs. Not only are you omitting fix-up costs, but you’re proposing to pay 80% of some number that’s irrelevant to our calculations. Further, though it’s totally irrelevant to our calculations here, you’re talking about paying about 93% of the asking price. What if, God forbid, the real estate agent did a pretty good job of pricing the house…maybe a few dollars on the high side. You could be overpaying retail…forget the 20% discount.
No deal here.
Re: Is there a deal here? - Posted by Clint
Posted by Clint on December 06, 2006 at 13:56:54:
- What are the rental rates for a 2/1 in Oahu?
1.5 Will the rental cover a note on 465K
- 28,000 is the realtors cut
- neg amort - forget it
- not a deal.
Re: Surf City on Oahu? W-I-P-E-O-U-T-! - Posted by NAthan(HI)
Posted by NAthan(HI) on December 06, 2006 at 15:55:03:
So I checked out the comps, they seem to be within a few dollars per sq. ft. on both land and living area. So is $465,000 is FMV, I would need to buy it at 70% of FMV or $325,000 and then subtract 10-20k for repairs. The MLS is posted online for Oahu, but does anyone really find good deals off the MLS or is it only good for running comps?
Dont get comps from MLS - Posted by Gene
Posted by Gene on December 07, 2006 at 15:55:20:
>>>>The MLS is posted online for Oahu, but does anyone really find good deals off the MLS or is it only good for running comps?>>>>>>
The MLS is not good for running comps…you want to get comps on houses that SOLD. Never base your comps on the asking prices of houses that have not sold. They will missguide you.