Dog or Deal?

I located a property - in a high traffic area that will undoubtedly make a good rental property given that I am able to get it at the price I want. However, here are the stats:

House - built in 1950
Good Rental Opp.
Strong market growth in that area

  • I chatted with a neighbor, the property has been vacant for 15 months (since she moved there)

  • It apprears as though another investor held the property & did some interior renovations – but ran out of money – this is a foreclosure.

  • Before it foreclosed it was sitting on 5 acres - but before it foreclosed the owner subdivided it & now the house sits on 1 acre.

  • I asked the listing agent to give me the 411 on this - he said because of the action above, there were title issues & now the title is clear?

  • Should I stay far away from this one? Or order a new appraisal - etc. However, I don’t want to put any $ into a property that I haven’t put under contract? How do you avoid this?

Do you have numbers?

We need:

Asking price
Market rent (if you don’t know look in the newspaper and see what other places are looking to get)
Estimated rehab costs
What are fixed up comparable properties selling for?

The property stats:

Asking Price - $89k

Market Value - ? (Assessor Values are wrong/based on prior 5 acre eval.)

Average Comparative Sales w/in 18 mos. - 125k (high=147, low 89)

Market Rents - 650 - 750/mo.

Rehab Costs - Estimated 15k
(This is a guestimate - should I get a rehabber out to look at the property before a contract is put on it?)

How does that work - will the realtor be cooperative?

My vote is pass on it…here is how the numbers work out:

Purchase Price: 89K
Rehab Costs: 10K
Final Loan Amount: 99K

Based on using 8% for a refi rate, the P&I payment would be 726.xx.

Not enough cash flow…No profit–no mission…


Scott Miller

This property is bank owned - and sold ‘as is’ and since it has been on the market for 15+ months - they are motivated to unload.

I put a contract on it for 30k.

However, there are no disclosures on the property.
Should I get an inspector out to the property & pay for it on my own dime or just include a contingency?

Also, when an inspector comes out to the property - and provides the report you have to pay him even if you decide not to purchase the property right?

Yes, you will have to pay the inspector for the work he has done regardless if you go through with the purchase or not. Do you have it under contract for 30K or did you just offer 30K? If you have it under contract then I would certainly spend the money on an inspector to find out what repairs are needed. Then have your handyman/rehabber give you estimates for the repairs you will make. THEN you can decide if the numbers work. Let us know what happens. Best of luck!

89k =dog

30k= deal :biggrin