There’s probably a ton of threads that start like this LOL but here it goes. I have a condo that belongs to my g/f’s aunt which she must get rid of it in two weeks because she’s moving to the Phillippines. The property is located in Chicago, IL and she said if she can avoid going to a realtor she’ll sell it to me for $135,000. The property goes for about $165,000. There are 3 other condos in the same building on the same floor, with same amount of bedrooms and baths that go for around the same price range.
I have never bought property before but have been asking a lot of questions and lurking this forum for quite sometime. My plan is to buy it then sell it right away. I have some debt on my end so I’m not sure how much that’ll affect my mortgage, also would it be better to rent out the place? Last question if I were to sell it should I go through a realtor? Thanks
In theory it sounds like you may make out ok. A couple things stick in my head though… I really need to tell you that I’m a newbie as well, so if someone else sees a flaw, PLEASE speak up so i know the correct advice.
One thing you said is that there are more on the market at the 165k range. The Realtor (for YOU to sell it after aquiring it for 135K) at 6% comm rate would cost you 9900.
How long are things on the market there? One question (that’s a great one) is - You have to account for Days on market - You’re just not going to put a sign in there and sell it immediately. You may have to pay mortgage and HOA fee for a few months before it sells. I dont know about your area but, around here things are beginning to sit for a while. If it sits long you may go upside down.
I really hope i havent rained on your parade!! Like i said i dont know your situation but, ask your local realtor what the average DOM (days on market) for condos are in your area. That will give you an idea of how much you’ll expect to pay out monthly for expenses. If it doesn’t make you go upside down, go for it!
I’m just like you - NEW and extremely skeptical about the amount of money that can be made doing this. So be careful, and i’m sure in a few minutes someone with alot more experience will chime in (thank heavens, they always do!)
Suppose you buy this condo from your girl friend’s audit, and then can’t sell it for 5 years. A bunch of drug dealers move in next door and won’t let you rent it because they strong arm anybody that comes to view it. It turns into a slum and you have to let it go back as a foreclosure and you loose $100k on the deal. Suppose you can’t sell it for 6 months and you go upside down on the deal and that makes you postpone getting into real estate for another 2 years? Suppose you find out after you bought it, they are going to build a nuclear waste dump right behind it and you are sure she knew this before she sold it to you? Will you call your girl friend’s aunt a female dog for getting you into this mess? When you see her at Christmas will you spit at her feet? If the answer to any of these is yes, then don’t do the deal. My philosophy is that I don’t do business with people that I can’t sue. That keeps my relationships clean. My girl friend is for kissing and her family is for lavishing gifts upon, not getting into business deals with.
On the other hand, since you are really not in the business yet, you can buy it. But suppose you buy it to live in and you can’t sell it for 5 years…well you get the idea. I just don’t do business with family members or friends. I will give her some money to pay the real estate commission, to help her out. She will really sell that condo in half the time if she uses an agent.
It’s tough to place yourself between business and family. BUT, don’t disregaurd this opportunity! This may a great opportunity make a profit as well as help out a friend. I agree, make sure your do your research and due dilligence, BUT keep in mind here is still a possible opportunity for you. I think a lot of the time people carelessly jump into things because it involves family(don’t make that mistake) do your homework, and see if the numbers work. BUT remember if it isn’t going to make CENTS, keep looking.
HOPE THIS HELPS
I agree with the days on the market info being necessary. Is the condo in good condition (similar to the others on the market)? I’m of the opposite opinion on Realtors. Call around for one that works investments. Their information is well worth the money as well as the protections via forms they use to protect you on many levels! I have seen too many do-it-yourself-ers get sued years down the road because they saved money on an agent. An agent will know all you need to about the properties surrounding, the market at the time, etc. You will still make money after the commission and you can walk away feeling safe the deal is truly done. This time of year is good for selling and throughout the summer months. I say, go for it with the proper protections.
It might be a good opportunity for someone who is prepared for this investment. If you have done your homework and you are comfortable with the terms or the price then go for it. Just remember if you are looking to buy the condo and “flip” it in a few months or less than 2 years you will have to pay taxes on the capital gain if you do not purchase it under a corporation or LLC.
I agree. 1031 exchanges are excelledt choices if you flip properties frequently. Be sure to use a CPA or an attorney familiar with them because there are strict rules with regards to the timing of the exchanges and the use and holding of proceeds. One small error can blow a whole exchange.
Just starting. I am looking at building some positive cash flow assets portfolio.
To do that I am going through electronic versions of the mewspapers, then calling on those that make any sense to me moneywise. That’s my initial criteria.
How do I include an agent into that equation since I would not know the area (throughout the entire country)?
I really would need an agent to research the deal for me before I go there myself at a later stage of the negotiation?
Say, you have in your hands an ad from the paper which makes sense to you? What would you do next, if you are out of your area (I live in San Francisco and current markets do not interest me for investment purposes right now).
Agents are generally paid by the seller, that’s the agreement in the listing packets.
The only reason you would owe an agent any money is if you found a FSBO and he would the FSBO refused to pay a commision. Then the agent would try to work it out with you.
Otherwise, if it’s listed generally it’s not your problem, it’s the sellers.
