Am I missing something

I need some help even though I do not post that much I read almost every day. A friend and a new investor came to me with a deal. After I looked over it I told him I would not invest in the property with him and he cannot understand why here are the numbers

3 unit building on the beach rents 1200 to 1400 a month
Price 450k on a short sale was 500k for 18 months before the SS was approved
Each unit needs about 8-10k rehab
28,000 dollars a year in taxes 3000 in Ins.
Tax assessor value 1.4 million
He says we can sell it in 3-4 years and make some big money am I missing something :help.


The only thing you are missing is the rose-colored glasses your friend wears. This deal is loser based on the numbers you gave.

I love property right on the beach. What state is it in, and is it literally right on the beach?

This one is a deal for long term investors. It isn’t going to cash flow, or even come close to cash flow, so it sure isn’t a deal for anyone who buys cash flow.

It’s the kind of deal I might be interested in (except I don’t buy where I can’t get there to keep an eye on it), but I’d put enough cash into it so the rent would pay the expenses. If you financed the whole thing, you’d bleed to death waiting for the 5-6 years before you sold it.

Nearly a million dollars in instant equity? You don’t have to twist my arm too hard. However… I never take someone else’s word for it about a property’s value, and I have very strict rules about what to buy if I am counting on appreciation. I’d have to see for myself to assess how I felt about potential resale value.

If it is literally right on the sand and it is in a good town, I’d look into turning it into a vacation rental and increase the income from it.

Yes it is right on the beach I have not seen it (only pics) or looked at what is worth except for what the taxes are based on I will be flying down Tuesday and take a look if you want more details tatertot send me an e-mail and if pass maybe we can work something out.


If this is in Florida (where there seem to be a lot of steep discounts) be very careful of the value. Tax assessor’s value might be way off.

I am not quite sure what you mean with your figures, but if what you are saying is that it was offered at $500,000 for 18 months with no takers, it isn’t worth 1.4 million.

Your potential partner wants to buy and hold. If you are going to hold, then pay exceptionally sharp attention to the blocks surrounding the property and make sure it is a quality area and not on the way down.

Florida is going to go back up after the intoxicated speculation gets shaken out of the market. Baby boomers are still going to retire and they still want warm weather and sun to retire in.

My opinion is that beach front is always a good buy and hold. Take a few minutes to look at the price of beach front in any first world country. Even in the second world countries, the price is way up there.

I don’t do partnerships (for good reason), and if you are going to do a partnership have a very clear understanding of what everyone’s responsility is, and what the exit plan is, and have it in writing.

The first thing that you missed is that the assessed value often has nothing to do with reality.

Second, if you had it, what would you do with it? It’s a $450K property with $31,000 in taxes and insurance and would rent for $1400 a month??? This may win the award as the biggest loser property that I’ve ever seen posted! The income just about covers 1/2 of the T & I!!!


NEVER take the tax assessor’s value at face value. Almost always way off. Get comps or a real appraisal to determine actual value.