cracks in foundation

[yelena]

hi,
I am a begginer in real estate investment...
I found a foclosure house. 1 bedroom, 1 bath.
This house has cracks in foundation and the flour is not straight because of those cracs. The price is 20% less than for simular house without cracks. Should I buy it?
Thank you

[eve_32]

With cracks in the foundation the price should be more than 20% below value. What is the cost to cure? That would help you decide is it still a deal with the cost to cure in place. I read somewhere that when investing you should be purchasing at least 25% below market value? If the property is in a really hot area that has a high demand but low supply and the property value is steadily increasing then in that situation I would purchase the property.

[yelena]

ok, thank you Eve for your reply.

[garrej]

Most people don’t want house with glaring defects.  That makes you in a position to get a lower price because you will take these deals.  I would normally only pay .25 to .50 on the dollar for a house with a big problem.  Housing inspectors will not pass houses with big problem if you need financing (so the price goes even lower.)  Better to complete these deals with cash.

Many times I get house like this 25% to 50% of value.  If it cost too much to fix you could get stuck.  Remember 95 people look at this house and they don’t want it because it needs work.  The seller will be getting tired of showing it.  

MOST IMPORTANT make sure you can fix it and make a BIG PROFIT.  You can buy houses in good shape and make a LITTLE PROFIT everyday.  (Never work for free.)

[yelena]

thank you, it is very nice of you to help me out