Recently a friend notified me of a property that bank is taking back and is willing to short sale at about 60%-70% of what it sold for in 10/07.The house is single family res. and is in excellent shape as well as nice neighborhood.My thought was to purchase property and lease it with option to buy at about 90% of its 10/07 value.I have two duplex properties now but don’t have any experience with the lease options.Does this theoretically sound like good opportunity or is profitability too small for the trouble.Any feedback appreciated.
What is sold for in 2007 could be twice what it is worth today.
The minimum acceptable price for a short sale depend upon the loan balance today. If the buyer put 20% down in 2007, you may be planning to offer as much as the current loan balance if not more. If the property is upside down, you would still be paying too much.
Suggest you based any offer you make to the bank upon a discount to current market value.
Records show they paid 106k.(and borrowed 106k)Two houses down from this property sold for 102k 9/08.This property has 1/4 acre less but construction type and layout as well as cosmetic appearance are similar.Other cma’s show 5 properties 80-115k within 3 block radius sold since 2/08.I have been in the house and it would be rentable today.My friend works with mort. company and is “sure” they will take 60-70k,so you think that is still not enough of a discount.Thanks again for any reply.
What is the market rent ?
I have seen 3BR single family res. going from 650-900.Lower end (650)being in the city where the yards are small/nonexistent, sometimes no offstreet parking.800-900 range usually are on the outskirts of city with sizable yards,garages,etc.This property has garage, large yard,and is on cul-de sac.There are many investors in city that I see L/O city houses in that 800-900 range.
Without knowing the property taxes, hazard insurance premiums, vacancy rates for your rental market, nor the cost of your financing, it would appear on the surface that you have a break even or marginally positive cash flow if you can buy for $60K and can get $800 monthly rent.
You need to do a cash flow analysis to see whether this property would be a productive income generator as a rental.
This is why I have always stated that SFH on not good long-term investments becasue rarely do you get the necessary cash flow from them. And this is the case in well over 90% of all markets.
Thank you Dave T and Brockovich for your input it is greatly appreciated!