i’ve been combing a certain area of the country for about 3 months now.
foreclosures in this area are running around 45,000 with ARV’s of around 80,000.
currently there’s about 50 in the system in this range in this specific area. and just the other day, the system was updated and 37 of these homes were purchased in the past 4 weeks.
these are prior to auction but are also HUD homes with listings of over 1 to 6 months and some for even longer - so they are available to investors.
a relative of mine, who may be helping with financing of a project or two, has concerns about the “out-of-towner” factor.
he’s basically asking me if these are really good deals or fluff and left-over crap, that locals have passed on, thus perhaps making them not-so-good investments.
but with the prices being so low and comps, both tax assessor and online [to-be-verified with CMA’s] being actually pretty darn good, should i be concerned?
i should make a correction, i wrote ARV’s of 80,000, but that’s not entirely accurate - basic comps in certain areas run anywhere from 70k to 95k, both tax assessed and quick online comps (which i know don’t mean much until you actually see the prospect)
so an ARV could quite possibly push the comp from 80k to high 80’s or even into the low 90’s - and in the specific areas we’re looking at - these projects will sell - the market is quite good.
Get a local realtor to work with. I give my realtor a list of 8-10 properties and he researches them to see which 1-2 have the best potential. Find yourself an inspector and contractor to work with. I found a contractor that has a license to do inspections. So for the inspection fee I get a written estimate for the repairs at the same time. That’s all before I buy. The inspection is worth the few hundred dollars it costs. It’s a bit more work but you can do it.
we’ll definitely have our first project inspected prior to making offer.
i figure, we fly down, see about 20 units - if one jumps out - we’ll get an inspector in there (we have one lined up) - he’ll look it over and then maybe we’ll even have it appraised (not lined up currently) - then we’ll make offer if things check out. and obviously, if we need mortgage - we must get appraisal…
now question -
municipality requires that any rehab over 5000 will require a permit. now, that’s 5000 on the books - who is paying attention to this? and, if they are - what if i have some cash set aside to pay for anything over the 5k…and i’m not talking about 10,000 here, i’m talking like maybe 750 or 1000 bucks over the 5k limit.
i can see if i put in a bid with a repair contingency exceeding 5000, well then i’d be shooting myself in the foot right?
but other than that - who’s really paying attention to this 5000 rehab limit?
If you hire a contractor, then they should pull the necessary permits for the work. It should be included in their cost. It’s not something I’d mess with trying to get around.
Usually if you do anything with plumbing, electrical, or mechanical it requires a permit anyway. Don’t worry about stuff like paint, carpet, and trim.
i realize that.
last thing i want is to hire a contractor - if the property requires contracted work - i’m passing, unless it’s over 45% below market value and 60% below ARV.
i can see paint, fixtures, carpets, floors, a sink here, an appliance there, ceiling fans, new doors, landscaping exceeding $5000.00
TMCG…I really can’t imagine how anyone from the permit division could see that you’ve gone a few bucks over 5K. How could they possibly know? Also, how could you predict repair costs so precisely that you knew in advance you would require this permit.
Anyway…the deal sounds exciting to me as long as those comps are accurate…I really enjoy reading all your responses and I truly wish you good luck with this deal!
he's basically asking me if these are really good deals or fluff and left-over crap, that locals have passed on, thus perhaps making them not-so-good investments.
A deal is a deal is a deal. If the numbers work, buy it.
i made about 12 phone calls yesterday to everyone but the realtor i’m working with there and i feel very comfortable with the decision to invest.
anyone have any advise on completing a long distance project like this? i’m up north and the project will be down south.
after making a purchase - we’re going to drive down there with tools. i’ll stay there with my partner for about 3 to 4 days - then i’m flying back (to work )
he’s remaining there to complete the work and i have a close friend down there (who’s in the contracting business - estimator for a big company), who will help my partner out.
we have a realtor who’s been in the business for 5 years and will market the property while we’re up here. we have a local attorney who actually closed my personal home about 5 years ago (i used to live in this area).
that’s it for now - for the first project. we also have some thoughts about leaving tools down there for future endeavors so we don’t need to drive down there - either in a rented storage unit or at a friends construction yard (that he owns) - this is a second friend, not the same as the first.
The good thing I see about your situation is though its long distance you used to live there so you know the market. Also, having friends down there in the biz helps tremendously.