Hi there!
Last week I saw a super house for sale for $250. In this area for a SFH on 1/2 acre is unheard of! I drove by it, thought it looked OK, then viewed the pictures on line. Certainly it needed updating, but the listing did not say it was a true fixer upper.
I watched it closely and of course there was an offer the next day.
Well, I missed my chance with this house. Of course there will be more opportunities like this if I just scout around. I just did not jump in fast enough.
Could some of the old-timers on this board tell me what I should have or could have done to get this house (low/no down payment, etc.). Say it just needed cosmetic work. I know, considering the comps, this is something I could have accomplished in 4 weeks or less, then put it back on the market for at least $300.
Thanks!
how do you know it worth 300 if you never went it. alos, sure it sold in a few dyas at $250k (and been a good deal), but it could have taken 6 months to sell at $300k. On a 6 month hold, selling with a realtor and taking out a loan, you are could have $30k in cost (selling commission, mortgage payments/interest cost, closing cost, etc, etc). Thus your theoritical profit drops to $20k. Now figure in the market softens by 5%; now you are nearly at break even…
probably a great deal for a owner-occupany, but appears to be a questionable flipper (without further info to justifiy it); especially in this general market condition.
The previous poster is correct. $50,000 isnt enough for that property. Between the fix-up costs (materials and labor), holding costs, realtor costs (even if you use an independent MLS flat-fee service to sell it yourself you’ll have to pay 2.4% at least to the buyers agent, it’s a no-go. Not to even mention that the income taxes associated with doing this type of business (rehabbing & selling) can be over 40%.
Personally, I aim for a much larger profit window with S.F. houses as opposed to investment properties that can be rented out, simply because the single family house will end up costing much more in holding costs if it has to sit vacant. At least with a duplex or 4 unit you can rent it out and have income coming in while you’re trying to sell it.
While costs are still holding steady for S.F. houses here in the Milwaukee area, the average Days on Market has gone from about 40 last year this time to over 100 now. Inventory is way, way up and it’s just a matter of time before the prices start to fall.
Thanks guys!
Very valid points. Surely, I did not do all the necessary calculations. This was based on ‘gut feeling’ without having the numbers to back it up. This is the Balti/DC area where houses are selling like hotcakes. I believe I have discovered a niche or a not so obvious location. However, looks like the key is to do the homework and be prepared ahead of time and the right house will come along.
Many thanks!