Found a property super cheap, what should I do next? I'm Completely Newb.

General Real Estate Investing
1

Spent a day driving around town looking for vacant houses. Found this one, had a real estate agent look up details for me. Contacted the guy, said he doesn’t have time to mess with it, so he’ll give it to me for $10,000.

What do you guys think I should do with it?
I’ve got $3000 capital, and no experience.
Thanks for your advice and answers!

2

The first thing you need to do is find out what it’s worth fixed up.

And the second thing you need to do is found out how much work it needs.

And that will tell you your best plan.

But…you are the one who needs to ultimately pick what you’ll do with it.

  • If you want to find a way to borrow money and rehab the property OR convert it to a rental, then go for it. You will need to talk to a conventional or hard money lender, or find some other source for the $
  • If you want to put the deal under contract and just assign it to someone else, and avoid paying much cash out of pocket if any, then go that route. There’s less risk, but less profit too

Good luck

3

What have similar homes within 1/4 mile sold for in the last three months?

I live in California, and not in an expensive area, and burnt-up houses go for more than 10K (a lot more) so maybe my opinion is colored a bit by that. I look at location first, check the rental activity in the area, check the comps and then decide whether to act or not.

Most experienced rehabbers have a tight handle on costs so, given your budget, if you’re not experienced in the trades, you’ll need to get accurate numbers from reputable contractors if the house is a fixer.

I was just in one of those the other day. Great neighborhood, reputable builder, looked OK from the street; most houses nearby look like new after ~60 years. This one was destroyed inside. Structural damage everywhere from neglect, water and termites. I would have offered them half of what they were asking and it still would’ve been iffy bringing it to market and the job would’ve taken 3-4 months.

If the house is habitable and resellable to a rehabber and/or potential landlord, I’d suggest wholesaling it by whatever means and using the gains to build up capital.

Can you qualify for a mortgage?

Do you own your residence?

I own my residence and a rental property free and clear but still have issues getting public financing in this climate simply because business has been tough the past couple years and I don’t have the numbers the banks want. I’m solvent and have good credit but insufficient verifiable cash flow for their underwriting requirements. Due to my business connections, however, I have access to private money. What’s your situation?

All this is relevant to working out a strategy, IMO.