I found a property that was being sold through a realtor for high 300,000’s. However the house burned recently and now the owner is selling as is for $150.000. I spoke to realtor/relative of owner who estimates $60-100, 000 in repairs. Comps in the area sell for 190,000-320,000. Neighborhood is a major, busy street, house is big and has potential but is a drug area.
I was thinking I should lock in the property, get a hard money or private investor loan, fix and then sell the property. I plan to bring a contractor on my first visit to home and get the real story on the damage. However this would be my first deal-not sure if I could pull it off.
Should I just bird dog this deal to someone else…should I just lock in the seller w/ a contract and then sell contract to another investor…or should I go all the way and rehab this thing myself? Seller states “they have had several offers already” from contractors/investors types.
Any help would be greatly appreciated.
I would recommend that you start with a project that will be easier to fix (cosmetic repairs only). A burnout may require more money than is obvious at first. Unless you have deep pockets and a contractor that you trust, find something easy to fix to start with.
Thanks for the advice. I agree that this may be too much for me right now. However I have an appointment to see the house this afternoon and would still like to go even if it’s for learning purposes. The contractor is a friend of mine and at the very least I could learn something from it.
But I have a question…how would you suggest I go about securing the property and passing it on to another investor? Should I bring the contract with me? What should I say? I have several people from a buyers list I’ve compiled that might be interested.
As Wilson said, don`t be in such a big hurry that you get hurt on your first deal! There are unlimited homes and businesses being sold every day! Every day a new beginning! Take the contract with you if you think the profit is too great to pass up Try to get their name on the contract with as many days as you can talk them into!
“Do not sign the contract on site.” Tell the seller your partner has to (OK) the deal! If your (PARTNER) likes the deal,we will contact you in a few days. My (PARTNER) handles all the legal maters! This will give you an out if you deside to pass!
As a licensed contractor myself, do not take a relative’s word for the repair amount. know very closely. Find out a subcontractor, rehabber, someone with experience to give you solid numbers. Permits are a must. if this is an area that is cleaning up, it has potential. If the building is zoned residential or commercial is also an issue. mixed use is great because it gives you flexibility to turn it into offices, apartments, sell to a gas station, whatever the use permit allows.
Otherwise, 150K acquisition +100K repairs spells too risky to me if the comps are havering around 190-250 anyway.