SEEING is better than listening to people tell you not to

General Real Estate Investing
1

out of state reo
price: 40,000

TAX appraised value: 94,000
(land 35k mobile unit 59k)

i want to see this property.
airfare and car rental - 550

lunch and dinner - 30

total cost of travel about 600

want to fly to see this ONE property, maybe visit a realtor i know down in the area.

so

i want to see the property. my thinking is this:
if the property is f’n shot but is structurally okay. lets say it needs some drywall, elec, plumbing (but not a new septic), new light fixtures, doors and windows. for a mobile unit.

even if it costs 15,000 to rehab and i negotiate a purchase price of 36k - my brother does all the work - stays there for a week and does the work all by himself, just bangs it out.

i have already got a quote on closing costs from attorney and for fire insurance and GCL insurance. Factor in 2500 there.

that’s 53500

sell it for: 73000

that’s 20k

this is all just fairy tale crap and it has multiple holes yada yada yada…

i have people telling me that i shouldn’t even go SEE the property.

i know the comps in the area - 88k ish for similiar mobiles, built earlier and on LESS land!!

i see 40k with potential for 75k sale

that’s at the very least, worth a look. but i’ve been told, don’t “waste your time” looking at it.

how did you guys (current rei’s get started) i mean, if the market you live in is RIDICULOUS - i must go outside of state - how did you guys start for crying out loud? if i have to do this to SEE for myself, well than wtf right?

2

What do you mean when you say ‘ridiculous’? Do you live in an area void of motivated sellers? Do all the people who want to sell have mortgages whose value is more than the house is worth?

I think most people (at least on this site, anyway) say not to look out-of-your-area as a precaution and not because they are competitors. It’s always easier to start with the knowns rather than the unknowns - in this case, the ‘knowns’ being your knowledge of the market, economy, laws, etc., where you live.

3

I remember this post previous.

The fact is your execution plan has a number obvious flaws.

You have no accting for holding cost, selling commission, discussion of how you will pay for it, etc. Plus your rehab figure sounds like a grab out of the air. Not to mention the “my brother will bang out the rehab in one week” on a $15k rehab. LOL.

You seem to indicate you know some people in the area, why not have them look. Plus, even if you personally go and look, do know enough to accurate figure the rehab? do understand the ins and outs of selling mobile homes.

The issue is spending $600 upfront to due diligence on what really might be a deal that will net you $10k or so once ALL the cost are figured into the deal.

The fact is most deals have problems (too numerous to list here). I probably end up only closing on 1 in 20 deals I look at (physcially or otherwise).

4

appreciate the info. my original thought was to possibly subdivide the property. see if the mobile unit was fixable at least running water, no holes in the floor and windows with a front door - sell the lot with the mobile unit on it and sell the vacant land (subdivided).

buy cash - spend as LITTLE as possible to get the mobile unit to look okay (built in 95) …and sell it all.

i called on the zoning and subdividing. as is, the property is zoned RA - residential agricultural - can put more than one structure on it, including a duplex…but again, i’m not into spending 60, 70k on that. i’d rather just keep it simple, buy it, fix it a little, subdivide it and sell it within hopefully, 4 to 8 months.

insurance - 200 a month
taxes - 894 for the year.

but i don’t know anything until i SEE the property.

5

I have to agree with your core point which is SEEing the property. I’ve vetted more than a few deals that looked great until I (or someone I know and trusted) looked at it.

It seems there is good possibility there is some profit inthis deal. Just keeping working away to minimize the risk/unknown.

My personally philsophy is to avoid the “big Oh Shxt” deal. In other words, a deal that looked like a big profit winner that 30 days (or whatever time frame) after you close, you realize this is a money consumering deal becuase you missed some detail. Its all about risk and risk is logrithmic, not 0 to 100% in many ways; Meaning you want to reduce your risk to 1/10,000 instead of 1/100 (for example). There are no risk free deals (b y the very nature of REI).

6

TMCG,

You want to do this rei thing. You need education. I figure that I learn much more by trying and failing ( in this case spending the money to go look and then quite possibly finding out that it won’t work ) than I do from books and/or about anything else. Do all you can to eliminate doubt about the deal and then spend the money to go see it. At the very least you will learn a lot that will help you when looking at the next deal.

Think big. Whats $600 bucks when rei could and will make you millions?

Regards,

DB

PS, I agree with aak, a “week to knock it out” sounds like wishful thinking for a “shot but structurally sound house”.

PPS I just reread your post. You said 4 times “I want to see this property” If you got the money, then do it.

7

well, it’s under contract for full asking price according to realtor as of monday night.

not sure who the buyer is or what their intentions are - i called the local municipality and i figured that for ME, i would subdivide it and seel it for well below market (according to my numbers in the area).

buy for 36k

subdivide and sell the two lots 28k each.

The property came up on Thursday June 29 and is under contract as of 7/3.

oh well, guess i won’t see it afterall - i knew in the back of my head that i didn’t have a shot - that it would move…oh well. move on.

8

it doesn’t matter what properties in that area are assessed for. what are they actually selling for???