$77k
WA State
3 BR / 2 BA ; Gar. w/ shop ; 1560 Sqft.
Realtor stated: needs cleaning up inside (paint & carpet) -
also needs grass in yard - no landscaping, etc. It’s winter now so any landscaping isn’t possible. Of course snow will soon cover the ugly dirt patch.
Here’s the kicker: the house is repo’d & priced $35K below appraisal. My father has the cash & I can help a little bit…is this a good investment? Location is 10 minutes out of rural city of appx. 30k people. I just don’t see how we could walk out of this deal with less than $20K in profit but maybe I’m overlooking it.
The first attempt to close fell through b/c the guy had a false SS#. He’s been deported now the bank is getting desperate.
Should I go for it? It would be my first investment property…would anyone else be interested in helping me invest in this? It has the potential for a $33k+ profit, but like I said no less than $20K in my opinion.
The county assessor showed no sale history so I would assume there’s plenty of equity to play with so a low offer may be feasable with the bank who repo’d it.
Since you have the cash on hand it will be less risky than using a hard money lender. How is the market there? Are there a lot of foreclosures? How fast are houses in the area selling? You should figure some carrying costs into you estimates and way. You need to pay your dad interest on the money even though it may not be at higher rates and even offer a partnership. A fair deal for you both may be 8 to 10% interest on the money plus 50 % of the profit. Dada are sometimes harder to work with than other lenders. I was always afraid I would screw up and not live up to my dads high expections when all the time he just wanted the best for me without the high expections. Did not meant to make this a father son sermon but it hepls to go into any deal knowing what is expected of each other.
It sounds like an OK deal. Figure in a real estate commission into your costs as well as closing costs. I am selling a house at $108,000 and am paying $1000 in sellers closing costs plus $3000 in commission plus $1000 in a bonus and an additional $400 in listing fee. I only owe $72,000 to the hard money lender but have made 5 payments of $850 per month in addition to the 4 payments upfront that I paid. It can addd up really fast. Even to walk away with a net net profit of $10,000 would be worth the effort.
If it does not sell what would be your plan as a backup? What could it rent for and could you get a loan to pay your dad back the money? You should not tie up that much cash without several exit strategies.
The problem here is that you do not mention what the home is worth. You are basing your hunch on someone elses appraisal. Never take someone elses word for the value of a home. Check it out for yourself. Once you determine what the home is worth after repairs you can calculate what you need to offer in order for this one to be profitable.
Keep in mind that the asking price isn’t necessarily what you have to pay.