Need advice Please! I have an opportunity to purchase a fixer upper that has had many offers that have been turned down by banks because it needs a new septic which runs about 10,000. It is riverfront property, so it’s a prime location. I can purchase it with 20% down and the seller will finance me at 4% with a 3 year balloon. My plan is to put in the new septic (which I have the money for) and lease option it to someone else with a 2 year balloon. How can I verify (other than taking a realtors word for it) that this property will be worth almost twice as much with the septic and minor updating? Apparantly the seller is older and doesn’t want to deal with it, it has been used as a rental.
Thanks!
fitz,
I am a newbie still putting out offers for my first deal, but thought I would throw out my thoughts…
I would think this would be rather easy to figure out if there are other similar properties nearby. What are they selling of have sold for? If you are pruchasing the house at a discount price (70% of ARV - Repairs) then you should already have plenty of room to market, hold and sell the property.
Fitzgerald222,
Most investors will have the realtor do a comparative market analysis (CMA) or you can have the property appraised. They are similar, but the appraisal is more in depth. The appraiser will compare the properties in the area that have sold recently and are similar in size, lot size, location, etc. He/she will add for things that are better and subtract for areas that are worseand then he/she will compare those things to the sales prices to come to a reasonable conclusion as to a fair market value (FMV). The appraisal will cost you $300+ but it will help with the peace of mind when you buy the property.
Wilson
Thanks Wilson. I will get an appraisal and go from there!