I am considering purchasing two homes from a seller in a lower-income area. He was originally asking $52,500 for each but I talked him down to $45,000 each. ARV is 60-65K. The homes were built in the 1950s. The homes are currently rented and my cash flow analysis estimates $230 per home. I had an inspector check the homes and was a little disturbed by his report. Of major concern were
lots of leakage throughout plumbing, exposed were connectors, damaged floor joists under back porch, and circuit breakers needing upgrades. Is this a good deal? Should I have have the seller come down more? Please help.
Get some estimates from some contractors/plumbers to see what it’s going to cost, for negotiating power with the seller. Now, with all of what you know now, is it financially a sound idea, there are tenants living there now, but would you have to do the work while they’re living there, or could it wait till they move?
Don’t get married to the property, if it doesn’t meet your specifications, if the math doesn’t work, walk away… If it works, and you can pursuade the seller to reduce the price by at least 50% of the total repairs, from the $45K, you might have yourself a great deal.
Don’t lower your standards to make a deal that looks good, but will end up being a nightmare! Do your due diligence, and let the numbers do the talking.
Good Luck!
Kirk