I’m in the process of making my first offer. The realtor faxed me the offer paperwork and in there is a Lead Based pain hazzard form for me to sign. It doesnt say the property has it but because of its age it may. What risk am I assuming if I purchase this property and find out later it has it. Also who would I call to inspect the house for this. I live in NC and I dont want to get into EPA trouble aspecially on my first deal.
Also these are the numbers if i dont have to pay for any Lead paint clean up. Appraisal (2yrs Old) $105,000
ARV based on comps $125,000
Purchase Price $50,000+closing cost
Repairs,Landscaping $30,000
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$45,000 pontential profit
I know some of you guys have done better deals, but since its my first Im excited about seeing it finally come together. Dirtwater
All buildings built before 1978 require a LBP disclosure…it is no big deal.
The risk of actually having it are that you have to disclose the fact…if it is tested and the tests are positive, you have to “abate and encapsulate”…basically, get rid of the lead-based paint (problem) and encapsulate the area with a good primer and new paint. If the paint is in good condition (no blistering, peeling, cracking, etc.), you can encapsulate it if you do not disturb it…
You can buy LBP testers at Home Depot and a lot of paint stores… they are easy to use. You can also get a professional inspector in and have him/her do it.
Abatement is a hazzard and should be done by a professional.
http://www.hud.gov/offices/lead/outreach/leapame.pdf
Looks like a good first deal to me…unless the paint is in bad condition, I wouldn’t worry too much about it.
Keith
I appreciate your reponse! Thanks,
All of my rental properties are older and have LBP disclosures…I have to turn around and disclose to tenants.
Keith
LBP is no big deal anymore. As Keith stated, any property built before 1978 require it. You don’t have to actually determine whether or not it actually has LBP in it though.
If your numbers are accurate, then you’ve got a great deal.
here’s the questions I’d have on your figures.
Where are you at in NC? What was the purpose of the 2 year old appraisal? Where did you get your comps?
Good luck,
Raj
Just to add something if you are planing to lease this property have your tenant sign the same so you might want to make a blank copy!!
Robb
Dirtwater,
Would you share how you found the good deal if it was already listed? My understanding is that there is no bargin in listed properties.
Thanks,
Anthony
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Maryland,
This is a VERY BAD understanding! There are tons of bargains in “listed properties”…I find real bargains all the time – the huge precentage of which I have to pass up on.
Remember, the listing price is what a seller and his realtor would HOPE to get…it may in no way reflect the reality of the situation. Under the right circumstances, ANY property could be a “bargain”.
Keith
Keith,
Thank you for pointing that out. So do you have your agent offer 70% of the ARV to the seller? What’s the percentage of your offer being accepted?
Thanks,
Anthony
My offer is based on cashflow NOT on a % of anything. Most of the properties that I buy are not “trainwrecks” but really need cosmetics. If I can fix and rent and make AT LEAST $125 per month ($1,500 per year) positive after ALL of the bills (including PITI, maintenance, management, vacancy, etc.) are paid, I will make an offer that reflects the reality of the situation (the area, the schools, the vacancy, etc.). Most of my properties do much better than that.
I only do 4-5 properties a year, so i can be a little more selective. I could easily find 25+ per year that fit my criteria but my wife and I both have jobs and we are not “spring chickens” anymore!
Keith
The way it came about was basically it fell in my lap. I called the agent listing the property. I had dug alittle and found out it was scheduled to be forclosed on. The listing agent told me It could be bought for somewere around 90k. I did’nt have a deal at that amount so I dug alittle more and got the lein holders info and called them. They said I would have to deal with the agent until it was actually sold at the court house. I casually asked the Lein holder if it did go that far what was a good rule of thumb for them to let it go or keep it them selves. They said usually 50% of the mortage balance was there magic number. Since the payoff was 88k I figured I would go back to the agent and make an offer of 50k. I would of gone 45k but I read in one of the books about REI that every seminar junkie is trying to get these same deals, so I figured I would give in alittle on the offer to insure it was over 50% and better my chances of getting it and still have plenty of room to make some money. As of today I still hav’nt heard from the real estate agent concerning my offer, but if I don’t thats ok cause i will go to the court house if need be.
So it does pay off if you make a lot of offers to the MLS list.
Thanks guys!
Anthony