First Possible Purchase

First off, if you couldn’t tell by the subject of this post, I am new to REI. I have really appreciated all the information that I have gained from this site and I am really excited to be a part of the knowledge sharing.

I live a very up and coming area in my city. It use to be pretty “ghetto” until a lot of new builders are coming in and expanding the city. There is a particular house that I stopped into today and spoke with the owner who is selling it on his own. He said the house was appraised at $155,000 about a year ago when they mortgaged it. They still owe $125,000 on the mortgage, which he said could be acceptable for a purchase price but would like $130,00 to help with moving costs, etc. They aren’t incredibly motivated as they are building a new home, which won’t be ready until April.

The question is this:
The house is rundown with severe water damage on the back deck. However, the house is on a street where 3-4 large suburbs have popped up in the last year. In fact, it sits on .6 acre right next to one of the new suburbs being built. My thought is I could purchase the home on speculation that a new builder will want the land and I can therefore sell it to him for much more if I knock down the house and sell the land only.

Does anybody have any experience with this or any advice on how to research whether this would be a good deal or not?


Here is the thing on that look at county records chances are the property value is nowhere near $155k for just the land that is. Builders buy land at a discount. For instance I bought a home in the Denver area for 225k now it appraised at 310k it is on 31,652sf lot so the same size as you are looking at. the house according to the county assessor is 285k the land value is 25k so chances are the lot you are looking out without a house on it is worth 15-30k.