I recently received a call from a motivated seller with a condemned duplex. After some research I found out from the city’s Community Development Office that the woman owed approx. $7100+ in outstanding fees associated with the 7 liens from the property. She is asking $24,000 for the duplex and the market value is $40,000. I have very limited understanding regarding liens on a property. With 7 liens is this woman even in a legal position to sell her home, and if so, is it possible for me to structure this situation for a wholesale, without burning my investor?? Any help would be appreciated. :help
Condemned, $24,000 purchase, $7,100 in leins, $40,000 ARV, $8,900 for buy, hold, repair, other. No way!
Is the market value its current market value (needing repairs) or the value if you fixed it up?
Is she asking $24,000 so that she can pay off all the liens, or is it $24,000 plus the amounts owed on the property.
There could be a deal here, but the details are not clear to me.
Well, the women told me that the property did not have any liens on it so the price of $24,000 would be so that she could pay off all the liens. And the current market value after repairs is $40,000.
Sounds like she is asking too much. You’re already at 60% of the value without making any repairs. If the property has that many liens on it, I’m just guessing that it’s not in very good shape.
What’s your repair estimate?
What would each unit rent for once it’s repaired?
So it’s a condemned duplex that has an arv of 40k, with a purchase price of 24k…that leaves someone only 16k to play with. That’s a tight budget to cover repairs, holding costs, closing costs and to make a fair profit.
Just because she’s asking 24k doesn’t mean you have to offer that much. Start your offers LOW…remember you can go up but not down.
Do you have a good repair cost down?
I do not have a repair estimate, the house is boarded up completely and after speaking with City officials I would have to take the boards down myself to get inside and then resecure the boards when I was finished with an inside inspection…Saying this I’m not certain how I would go about getting inside to get a repair estimate
Take the boards down! In my experience 99% of the time they’re just screwed in. Bring a cordless drill (not some cheesy cordless screwdriver!) with you to make it easy. Bring a hammer just in case.
Of course, make sure you get the owner’s permission to go inside, if you can get the owner to go with you.
Before you go in walk around the house completely first to make sure it’s all boarded up and there are no signs of anyone going in there. Boarded up houses are nice places to stay for crackheads and junkies, and real nice places to do “business” for local prostitutes. ----> Yeah, I’ve been in quite a few boarded up houses and I’ve seen the left-behinds all over the place. They’re not always like this, but don’t be surprised.
There ya go, you’re in!
My staring point for offers on condemned property is usually a percentage of the land tax value. This is b/c the City doesn’t think much about the structure, so why should I?