Posted by Cam on October 19, 2001 at 14:12:27:
First deal? Not a good idea to start with a complete gut and rehab. Money pit? Absolutely! If you don’t have the money for a down, where will the money come from for the rehab?
Is this property an investment I should make? - Posted by ShawnMarie
Posted by ShawnMarie on October 19, 2001 at 13:39:49:
I have found a property in a small town not far from where I live. It is 2-3 bed and is totally trashed. It will have to be gutted. It is on a large lot and the frame seems to be in okay shape. The sellers want $5000 cash or will finance for a higher price. I don’t have any money down and I really want to get started in the business. Is this a good opportunity or just a money pit? Any advice is appreciated!
Re: Is this property an investment I should make? - Posted by Ronald * Starr
Posted by Ronald * Starr on October 19, 2001 at 15:51:04:
Shawn Marie-----------------
It could be either. If you can’t tell now, you need more information.
Now, if this is a great deal, it might be snatched up by another buyer quick. There is an old saying in bargain-buying real estate: You don’t steal in slow motion.
I recommend that you sign a contract to buy the property as soon as you can. I suggest that you write to buy without owner financing. And negotiate on the price. Offer $2,5K and try to settle for as low as possible. Do not tell the owner that you don’t have money.
Be sure that your contract allows you to get out of it if you need to do so. There are clauses about “sale is void if buyer is unable to obtain money to buy the property.” Or “Sale is contingent upon property inspections by buyer, contractors, roofers, termite repair persons and other inspectors of buyer’s choice. If buyer does not approve such inspections within 14 business days, sale will not proceed.” Be sure also to have a clause that says, “buyer may assign this contract.” If questioned about this, say you may need to put it into a partnership with a friend.
Now, when you have the property tied up, you can take the time to figure out if this is a good deal or not. If not, drop it.
If it is a good deal, you can then resell–“assign”–your contract to somebody who has money and knowledge to take the property. Or you do what is known as a “double closing” when you find a qualified buyer. You can read about these in a book “Flipping Properties” which was recently published–written by William Bronchick and another author. Costs less than $20 at a major bookstore. You can also read about them on the main bulletin board of CREONLINE.COM . Put “flip” or “flipping” into the search function there. Or “double closing” or “assign contract.” Or anything you want to know about. Whatever you want to know is already here, ready to be read.
Good Investing**Ron Starr