I called an owner of a property that I was interested in. The owner is a licensed RE agent and Appraiser. It intimidated me because this is my first inquiry ever. The house is in poor condition. I am going to take pictures tommorow and do an assessment. I am new too it all. I intend on sending my brother the pictures to give me a rough estimate of what it will cost to have it renovated. It is a duplex that will sell for about 110,000+ (i think) because of the location. The owner paid 2000 dollars for the property back in 1983. What should I do next. Any suggestions will help.

Congrats on taking the first step! Just do your own due diligence like you would any other property. I’d venture to say that most agent/owners would use the opportunity to teach you and appropriately help you through the process since there is a chance of selling you more houses in the future. At least, that’s how I operate my business.

HOWEVER, use your own appraiser, have your own contractor give you estimates. The seller should provide you ample access to the property to do this. Don’t let him rush your diligence. Take what he/she says with a grain of salt and check everything out for yourself. I’m not knocking agents or appraisers, I am an investor/agent myself. It’s just very easy for a very motivated, knowledgeable seller to take advantage of a novice investor who gets emotionally attached to the first house he/she calls on. Unfortunately, I see it all too often. Just because someone has a license attached to their name doesn’t necessarily mean they have your best interests at heart.

If you know an experienced agent that you trust to act in your best interest, you may even want to involve him/her in your first contract negotiation to protect yourself, and maybe learn a thing or two.

Good luck, and let us all know how it turns out!

This is the catch. I told him that I was interested in buying his property. Then he asked me at what price. It stumbled me. I told him that I would have to go inside and assess the damage. I did and OH MY…what a mess. :grim: It needs help bad. I took pictures to show to my brother for an estimate. How do I go about giving him a price or should I ask him what is he wanting for it.

You can’t really make an offer until you know the value of it once repairs have been made. How much will it cost you to make repairs? Sometimes things that look really bad, but are really not that expensive to fix, and that’s true the other way around as well. I question how well your brother can give you an estimate based on pictures. Is he the one who will be doing the work? If not you may want to get someone local who can see the house to give you an estimate.

How much are your holding costs while rehabbing? If you are rehabbing and reselling, what will it cost you to sell it including agent fees? If it will be a rental, what are the rents in the area? What are taxes and insurance, mortgage payment, etc? You don’t want to analyze it to death, but until you know approximately what it will cost you, you can’t make an offer.

Tell him you are running your numbers and ask him what his asking price is, what financing options he might have available. Ask what his rock bottom price is for a cash deal (good chance that he would even accept an offer less than that!). Quiz him, if you haven’t already, why is he selling? Why is the place such a mess now? How long has it been vacant? Are taxes paid up? Is the water bill paid? If it was a rental, what rent was he getting? What does he think it would be worth fixed up, how much does he think it would take to fix? Listen to him and then check it out for yourself!


Thank you for sharing your knowledge. I am trying to get a rough estimate from my brother. He will be the one doing the work. I am going to quiz the seller/agent in a few minutes and I will post how it went. Your post have helped me out alot.

Okay here’s the deal. He say’s the property has been vacant for a few months before Christmas. The tenants left a MESS. The property is a Duplex with an upstairs and Downstairs unit. He said that he was getting $300+ the for upstairs 1 bedroom, and $500+ for the downstairs 2 or 3 bedroom/den downstairs. I ask him how much did he think it would be worth fixed up and he told me that since he was an appraiser that he had to be careful about revealing that information but he said about $160,000. Then he continued to say that in good condition it would go for $100 psf. Then he babbled on and said the the house next door recently sold for $245,000+. The house next door is almost a replica of his, but not in the same condition of course. Then I asked what is the lowest price that he would sell it for. Hesitantly he said that he really hadn’t thought about it too much, but then quickly said $75,000 or so “quick sale”.

Any input would be helpful

Oh I looked on the county website and seen nothing of a sale on the property next door. I will go to the courthouse and inquire.

Good job getting information out of him. If your intention is to hold this for a rental, it looks like at $800 in rent, buying at 75k, value 160k, you would probably be in a negative cash flow situation. And that’s not even taking into account what you would have to spend on repairs. If the value is 160k there’s a lot of equity and if you repair and re-fi, you have the potential to pull cash out, but to me that’s not worth the on-going negative monthly negative cash flow. Disclosure: I’m looking at this as if it were a property in my area, with my taxes, insurance, the re-finance rate I would expect to get on an occupied rental, etc. There is also little to no appreciation in my area, so I don’t count on that either. The numbers could be different for you.

Other things I would take into consideration: Is this a “rental” neighborhood? Is this property destined to always remain a rental? What are the rents for duplexes? Call on for rent signs in the neighborhood, call newspaper ads, etc. Maybe the rent was low because he was a slumlord.

Another option: Could it be converted to a single family residence? Is there any potential to rehab and retail as a SFR? If these numbers are valid, and the repairs are reasonable, there could be a good profit margin here. Maybe that’s why the one next door sold for so much higher, if it really did. Or maybe the one next door sold to someone who is living in one unit and renting the other. Unless you happen to be in New York or California, or another high priced area of the country, I just can’t imagine paying 245k for a 2 unit rental house, especially with one unit being a one bedroom! And even if the prices are in that range, I would expect much higher rents to support that purchase price.

As far as your next step, you need a whole lot more information before you can make an offer. Verify what the seller told you and run your own numbers. Hope this helps!

Thanks for your input Kimdrake. I intend on doing more research. The area is now zoned for SFR. My brother is coming down this weekend to look at the flaws and give me a good estimate. I will ask him about the conversion to a SFR. I thought that 75K was high also. I would not dare give him that for what condition the house is in. He told me that the tenants were living there with the current conditions. He said that he did not have time to deal with the property because he has other things going on and that, if he were younger he would fix the place up himself. He says he’s 60+. However, I am going to aquire mor info just so I can get the experience of researching and questioning.
Thanks again.

Okay, I did some research and the property he told me that sold for 245k was down the street and a 4-plex. My brother came down and gave me a rough estimate of 35-40k. The floors in the property are just too bad and uneven. The foundation is horrible. It is truly too much work for me to try to do with my brother and his crew, so I’m going to pass on it. I am going to call the owner tomorrow and ask if he can go down on the price and if so how much. Maybe, I can turn it over to another investor for a bird dog fee.


Do yourself a favor and skip the bird dog bit. You know how to work the numbers and all, take the deal one step further and make $1,000-$5,000 out of this deal.

Try to get the price down due to all the existing repairs needed. If the owner hasn’t seen the property lately maybe some really bad photos and lots of high estimates for repairs will help him rethink his price. Especially if he has been trying to sell this property for some time now.

Also, if you were going to go any further and depending on the current tenants you could see if they would be the type that would want to lease to own their half of the duplex. Then they might have some incentive to fix up the place.

The tenents have been long gone. When I first took a look at the place, I asked the owner had he seen it. He said yes. It was abandoned and left in a mess. He was a slumlord. He said that he had tenants that were paying in the condition that it was in. I find that very hard to believe. And to think that he is a Realtor/investor. I am going to run the numbers by him and see what his reply will be.

Hi gltucker,

I was wondering what happend to this property. Maye you can still make something of it, but in any case, it sounds like it has been a good learning experience that you can apply to all those ugly houses in your future!

Good luck,


Definately a learning experience and a ugly house. I hope never to see another one in that condion again. It truly needs a lot of work. Maybe someone will have the time to rehab it. I am going to shoot it by a couple of investors to see if they take a bite.

Once again, go ahead and make a list of investors willing to do MAJOR rehab jobs, but be sure to lock that property up with a contract for a SUPER low price. Make it assignable and subject to your partner’s approval (seems a popular reason) and then if you screw it up and you got it at too high a price or no one wants it because it is TOO messed up then all you lose is maybe $25 for the option fee, but you have the property locked down and you can show it off to the investors and have them go look at it and such without fear they will steal the deal.

Is there a place where I can get sample contracts forms with clauses already in them.

Use the standard sales contract acceptable by your state. Everything I mentioned is just something you need to write in a specific spot. A realtor will be able to help ya fill all that in. It is not some special contract or anything just a matter of stating something within the typical sales contract.

Great thread, I agree with Aramirez on this one it seems to me that you have some knowledge on your side that you should not try to do anything as a bird dog here. If it were me I would not I would try for a little more as suggested. You have a out as long as its in the contract. good luck


Okay, here’s the update. I talked to the owner today and gve him just the repair cost of which is 35-40K. This is not including taxes, interest, etc. He told me that that is about right for the repair cost and that he was planning to use that much to make the place a little nicer and maybe even put in an extra bathroom. I asked him could he come down on the price of 75K. He said that he was firm on that because 75K+35K? repair would put him at 110-120K and ARV would be about 150-200K. I didn’t ask him how he came up with that ARV…I just wasn’t thinking. In the location where the property is I do not think it will go for more than 135K, if that much. Houses in that area are not selling so it is hard to get a good comp. I think he is taking me for an idiot. I am a noob but I am not a fool. I told him that the price was too high for me and if he changed his mind about the price to give me a call. I have logged him in my database and will touch bases back with him in about 3 months.

Try back with him in 30 days…

Try to do some more research and find out the exact comp prices in the neighborhood. Also you need to verify rent prices. It could be that with upgrades you will be able to charge higher rent.

Since the guy you are dealing with is an agent/investor I would assume that he ran the numbers and has good reasons to sell.

Good luck