TWO FAMILY Unit (both Rented now)…8 out of 10 on overall condition of the unit.
Current price 88,400 (Started at 109,000), comps in area are going for mid 90’s to low 100-105k)…he has dropped price 3 times already
Owner is 4 months behind on a FHA loan (he owes 67-70k right now), he has already lost one place to a sheriff sale (19 July) and this one he is barely hanging on (Brutal Divorce).
Question do I make an offer of 70k (less??) right now instead of waiting till it goes to Sheriff sale and I lose both tenants…should I wait or pull the trigger
Comments please…I have been looking for the right home/area for my first rental…thoughts…be brutal.
BTW THIS SITE IS VERY INFORMATIVE…hoping to hear from a person called IRON RANGE…he is brutal but honest
Find out what the rents are on this duplex, and find out what the market rents are for the area. Post the rents, taxes, and find out if the utilities are included. Only then can you determine what the max purchase price can be. If the utilities are included in the rent then have them call the utility company and get the last two years of utility bills. After you post the numbers we can then determine the max price you can offer.
This is my experiences with divorces. There is a minimum number the seller/s will be allowed to sell the property for according to the divorce. So just ask him what is the minimum he needs (just ask). If they aren’t that far along in the divorce then just ask him what he needs to get to get out from under the property, and then offer about that amount. This is all continguient on that amount meeting the MAX PRICE we determined.
If we get this far then I would try and buy the property before goes to the Sheriff sale. If its a deal then jump on it. Don’t wait for the Sheriff’s sale. Don’t worry about buying vacant properties. Buying vacant properties is a lot safer then buying occuppied properties.
COMPS in the area (Last 2 years)
105k, 102k, 104 ( I believe this house falls right in line with these homes)
Rent 800 (4 Bedroom) and 600 for lower (2 Bedroom)
He pays everything I believe (After reveiw of rents in the area) he is giving the 2 bedroom a real deal (area rental properties in the area for two bed range from 600 (small) to 750 (nice ) and they pay at least electric (50 a month avg) again I feel my house falls right into this range. 4 bedroom (800) is near market average (800 is average) but again they pay electric among the other rents…
Taxes 140 a month
Util: 239 even billing
Total : 410
Divorce is free and clear on this property again he owes 68-70 k
He has paid his taxes as well
There are two GOOD ways to view utilities.
Don’t buy properties that do not have utilities seperated. This is how most of the big investors on this site view utilities.
Don’t buy properties that do not have utilities seperated, UNLESS its a very good deal. To me, money is money so I use #2.
The even billing that the seller has will likely stop when you buy it. The utility company will require you to have owned it for one full year before you can put the property on a even billing plan.
The seller is 4 months behind on the pmts, so a short sale might be possible here. I would call the seller and tell him you’re interested in the property. Tell him to call the mortgage lender. Have him tell them he’s four months behind but has a buyer that will pay $50,000 and bring the pmts current. I’ve only done 1 short sale so I’m not an expert on the process. If they say yes then you might have a deal here. Other investors that do short sales may have a better strategy to get the lender to go for it.
I would start by getting the seller to call the lender to see if a short sale is possible. If you can’t get the price down then walk away. You will walk away from many deals that just won’t work. That’s just part of investing. You can only buy great deals.
If you pay utilities on a property then the seller is going to have to sell cheap. Or you just can’t buy it. I view paying utilities like I view rehabbing. If I have to rehab or pay utilties then I want a big discount. Bigger then is maybe justified.