I am looking at a duplex situated on the east side of cleveland in a rough neighborhood. Here are the numbers:
Asking Price: $16,000
needed to rehab: $15,000
the doubles are said to rent from 500-700 a month but due dilligence has not been completed. The seller owns home free and clear and told me he wants OUT! He is willing to negotiate with me. How would you guys go about putting this under contract? This home like I said is not in a sesirable neighborhood so I thought about just lease optioning the home or getting him to sell me using a promissary note and find another investor to purchase my contract. Any help on how I should take this home would be appreciated.
What is the ARV? Let’s assume you can Purchase & rehab for 65% ARV. You could have a problem selling or renting it out. Remember that rent is only good if you can collect it. I think you should live in the house while you’re rehabbing it. If your answer is " I don’t want to live in this neighborhood!", chances are that potential buyers and renters will say the same thing. Find a better neighborhood. Cheaper is not always better. That being said, if you can find an investor that’s willing to buy property in that area, you could do some birdogging for Some quick cash. Remember to find an investor and their criteria BEFORE you put in an offer. If you can’t find anyone that wants to invest there, you shouldn’t be there either.
That is what I am thinking. I told the guy I wouldnt be interested in holding the property myself. Thee arv or after repaired value will be 60-65k. I would never live in this neighborhood or try and hold onto the property and collect rents. He said if I prefer that I can just be an intermediary and find a investor willing to purchase the home and everything over 15k would be mine. So it would pretty much be birddogging the property since I wont get it under contract.
If you can find an investor relatively quickly, you could make some quick cash. You may find yourself spending a lot of time finding an investor. Don’t spend too much time trying to find an investor. Your time is money. Also remember that if it’s a good deal, finding an investor is usually pretty easy. good luck. :beer
Why is he selling? Chances are that whatever problems that he is having now (collecting, finding tenants, crime, etc) will continue for your investor. I would let the investor that you find know what was going on as well. Especially in E. Cleveland.
I live in the Cleveland area myself and I don’t even answer calls or emails of people who have homes in E. Cleveland. Crime is INSANE in E. Cleveland right now. Cops are working 12-hour shifts just to try to keep up. Good luck finding someone to take that off of your hands. (Maybe an out of town investor might be able to get suckered into something like that.)
Based on the comments of the current owner, I suggest you first visit the home. If it is so undesirable, you have no way to know if you will be able to rent it. Focus on the practical aspects before worrying about the finances.