Possible deal in DC

General Real Estate Investing
1

Possible deal in the DC area, elderly person looking to sell a second home. The home is located in not the most desirable area. Asking $ 90,000, but negotiable. She’s tired of paying property tax. Home is paid off.

I was informed that the house needs to be complete gutted and not able to be rented.

Asked about a lease option and was turned down.

Any suggestions on how to help structure a deal that will benefit the home onwer and myself…Not looking to take avantange of a nice lady…

Would this deal make a possible route for a hard-money leader for financing?

New to the realestat investment.

According to the Tax Year 2011 Preliminary Assessment Roll
Current Value Proposed New Value (2011)
Land: $137,310 $122,880
Improvements: $28,110 $26,310
Total Value: $165,420 $149,190
Taxable Assessment: * $165,420 $149,190

  • Taxable Assessment
2

Hi,

The cost to potentially remodel a home for example of 1200 sq.ft could run upwards of $60k which includes updating electrical, plumbing and HVAC.

If this home requires gutting and a complete remodel including electric, plumbing and heating & cooling could run $50 a sq. ft.

If you pay $90k for the property your closing cost’s will run another couple thousand dollars. If this home was built before 1978 it has lead based paint and potentially has asbestos based floor tiles under carpet or flooring, could have asbestos based mastic used to apply the old vynal and square floor tiles used in construction and could have asbestos based exterior siding or insulation used for steam boilers or pipe insulation.

If you have to have a haz mat team come in and strip this houses interior, it could run $15k to $25k depending on hazardess conditions.

Then when you ad in your carrying costs (Loan, insurance, utilities, maintence, yard service, etc.) then when you add construction cost for remodelling and then figure your cost’s to sell and close the property to a new buyer which at $165k would run about $14,000.

This tells me you would have to pay about $70k for it with no profit, and if you figure in some profit you would want to buy for below $50k.

Now, giving me assessed value does not tell me what actual value is, but keep in mind your doing this for profit and don’t let a little old lady take advantage of you, if you can’t do the deal say “No Thank You”.

This gives you some idea of the costs to factor in, keep in mind a hard money lender will only loan either 70 or 75% of your purchase or about 70% of ARV if they will make rehab money available with the purchase, you would have to still come into this deal with $20k to $75k of your own money!

Now, I did a property last summer I bought as a inheritance from a son whose mother passed away and they agreed to subordinate to a new 1st TD basically allowing us to use our hard money lenders capital to rehab and the original seller was paid the purchase money as a second when we sold the property.
A creative finance deal!!!

Good luck,

              GR