Is this a good deal? - Posted by Jeff M

Posted by Brent_IL on February 19, 2004 at 24:16:11:

When you said, ?The house is appraised well below market value,? you meant to say that the house is listed well below market value, right? The appraised value is market value by definition.

I?ve grown cynical. My question is why an active agent in a popular real estate brokerage would take a 28% hit if the true market value is $139K when he could offer to pay for all closing costs, do a loan buy-down, make the buyer?s down payment, pay his broker, and still net something out of the deal.

Is it possible that the only way that this property generates $1,400 a month is with Section 8 tenants, and that the bathroom is not being approved by the housing authority, so no more Section 8 tenants?

If what you are being told is verifiable, I?d take the deal, but I?d do a full inspection before writing it in stone.

Is this a good deal? - Posted by Jeff M

Posted by Jeff M on February 17, 2004 at 12:48:49:

During my morning ritual of reading the classifieds, I found an ad listed by a popular agency for a 2 family home. One is a two-bedroom and the other is a 3-bedroom. One is rented, the other was recently cleaned and refurbished to suit a new tenant.

The owner is an agent for the aforementioned realty and he’s just looking to unload some of his property. He’s offering to sell this house as a no money down deal, which is what first caught my eye. The house appraised for $139,000. He owes just over $100,000 and he’s willing to sell for just over what he owes. Basically it’s about $30,000 under market value (the second time this happened to me in the past week).

He said the property generates approximately $1400 in monthly income from the rents, and since I just bought a home for about the same price, I know the mortgage will be around $870. Other expenses will probably bring that figure up to about $1200 (bills and such). So I could be looking at a $200 positive cash flow. He did say that one of the bathrooms is settling and might need repair in the future. He also suggested that I go with Section 8 tenants. I’m not sure if that’s because of the neighborhood its in or if its because of the security of getting the rents.

What I’m asking is if this sounds like a good deal to you guys? This would be my first deal, and luckly I’d be dealing with a realtor so he may help walk me through the deal (I don’t know if that’s good or bad). I haven’t formed an LLC or any kind of Corporation so if I should do this first, where do I turn? The house is appraised well below market value, and according to the seller, he’s just trying to sell off some of his extra properties. I’ve got the address and the lockbox code to look at it this afternoon after work.

Any advice for this newbie, working on his first deal? I got tired of reading and doing nothing last night so I started writing down my goals and I’m trying to get started. Your advice would be much appreciated.

Thanks all,
Jeff M. (OH)