Advertising a "free" house - Posted by Karen (Syracuse)

Posted by Karen (Syracuse) on July 12, 2002 at 14:55:15:

Got a chuckle out the “boys town” reference. Am hunting down the owner next door. Thanks for a great idea!

Advertising a “free” house - Posted by Karen (Syracuse)

Posted by Karen (Syracuse) on July 11, 2002 at 13:43:57:

Hi all-

Also signed an option for another house yesterday–had a busy day!! :smiley:

Anyway, this a two-family house in Syracuse in a decent area. The downstairs flat 3BR/1BA is rented below market at $450 per month. The upstairs 2BR has been completely redone–new paint, carpet, bathroom, ceiling fans. The owner is leaving it empty for the new owner to fill. The house is nice, the upstairs flat is very nice. The downstairs tenants have lived there for 7 years. The neighborhood is mostly single family owner-occupied. The problem is the next-door neighbors.

Next door is a 3-family that has four families living in it. It is in rough shape with rough tenants. They throw their garbage into the driveway of the house I have under option. Apparently the police, fire departmnet and code enforcement are there a lot. When we went to look at the house, there were three able-bodied young men in their 20s or 30s just sitting on the front steps hanging out yelling to cars driving by. This was mid-afternoon on a weekday, when most people should be at work. The current owner tells me that there are rumors of drug dealing and that the house was condemned recently. Not great neighbors, obviously.

Anyway, I got the house under option for $29,500. Area sales average in the high 50’s, but I’m not sure if they are 2-families are not. There are some two families for sale in the area, ranging from $40K (really rough fixer-upper) to $80K, really nice, newer and bigger). My thinking is to try to find a buyer who can qualify for financing, as I don’t want to be tied to this house for any length of time. I would like to work it like this–

**Advertise “Free House with Good Credit”
**Sell to an owner-occupant for $49K. ($49K at 7% for 15 years is just less than $450 P+I). I can always change the price a little if need be to make it work.
**Owner occupant pays taxes and insurance–about $225 per month–or less if they raise rent to market
**Make a quick $20K or so.

Is this a possible scenario? Would I have to do a double-close (purchase from original owner and then sell to my seller)? Am I missing something? What do I tell people who call for info on the house about the neighbors? Can anyone think of another way to get this sold quickly without having to hold the property at all?

I am very excited, a little nervous and can’t believe that I signed a contract and an option in one day!!!

Thanks in advance for your wisdom,
Karen

Re: Advertising a “free” house - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 11, 2002 at 21:42:11:

Karen–(NY)-----------------

I don’t like your “free” advertising idea. The word is powerful, but I haven’t yet seen that your buyer gets a “free house.”

Ususal advertising with something like this is along the lines of:
Let the renters buy your house
Let the renters pay for your house

Here, where the monthly out of pocket for the owner is so low, I’d suggest something like:

Zero Down , $65 a month for 2 bedrooms. Must qualify for loan. Where the monthly cost is their net after the rental income.

If you want to push things, you might calculate with market rents in the lower unit, and after-tax cost for the owner. It is possible that you can get it to the point that they paying nothing out of their pocket to live in and own the property. If that were so, I’d feel ok about an ad saying something like:
Live for free! Let the renter pay your cost.

Good Investing************Ron Starr************

Re: Advertising a “free” house - Posted by Robert E

Posted by Robert E on July 11, 2002 at 19:31:21:

Karen - Agree with GL in his view of the charming neighbors. First thought that came to mind when you mentioned the situation next door to your subject property was to contact the owner of that property and see if there is not an opportunity to add more profit and at the same time cure the ills by taking control of the property, later, if not immediately, dismissing the current tenants. Even if the existing leases are binding thru acquisition…when they come due, renew them on a month-to-month and dismiss them after 30 days for reasons of renovation. Good luck!

Re: Advertising a “free” house - Posted by jeff

Posted by jeff on July 11, 2002 at 18:08:27:

if speed is your deal, try to just assign your option to your end buyer and let them worry about the closnig and the neighbors.

it isnt that easy of course, but it will speed things up usually. you also wont make as much profit normally, but some profit instead of the risk invovled with your situation may be better than fighting with the neighbors some time down the road.

just a suggestion, not a good one sionce my pizza is abuot done, but itll do if speed is your main worry.

i still dont understand where the FREE part comes in here, unless it is just to get callers quick.

the free house offer sounds more like an over-leveraged property setup than an option arrangement, but mi open to all types of investnig techniques. whats your plans as far as the free part is concerned?

Re: Advertising a “free” house - Posted by Karen (Syracuse)

Posted by Karen (Syracuse) on July 12, 2002 at 15:04:05:

Ron-

Thanks for your thoughts and wisdom. I read lots of your posts. I really can’t make up my mind about this one. Initially I had reservations like yours about the word free. DH had a pretty compellng argument though when he said that if someone were to win a “free” house, of course they would be responsible for annual property taxes and insurance, but the house itself would be free. Same thing for a house received as a “free” inheritance or gift.

I keep going back and forth and have until Monday to decide. Thanks for your input.

Best,
Karen

Great idea-thanks! (nt) - Posted by Karen (Syracuse)

Posted by Karen (Syracuse) on July 12, 2002 at 14:56:29:

nt

Re: Advertising a “free” house - Posted by Karen (Syracuse)

Posted by Karen (Syracuse) on July 11, 2002 at 18:20:04:

Hi Jeff-

Thanks for taking the time to reply to my question. I hadn’t thought of assigning the option, I will definitely add it to my ideas pile for this one.

As far as the “free” part, yes, it is a way to get people to call, but in essence the house would be free. I’m hoping to put together a zero down loan and with the numbers in my post, the tenant pays the P+I on the loan. In 15 years, it’s owned free and clear. All the new owner has paid are taxes and insurance, while living in the upstairs apartment. I probably should have been clearer about that–sorry.

Thanks again!
Karen

Re: Advertising a “free” house - Posted by GL(ON)

Posted by GL(ON) on July 11, 2002 at 18:28:35:

Too good to be true. Louse it up a little and you will get more buyers.

By the way have you contacted the owner of “boys town” next door? You may be able to get a super deal, throw the bums out, and wind up with 2 real nice, positive cash flow “keepers”. Or be able to sell for way more money.