Check this deal out.... what am I'm missing? - Posted by jason

Posted by Joe on March 22, 2006 at 18:27:25:

Check your repair numbers, they sound a little low for the work you described … even if low is just not allowing for the buffer yet … but you want buffer. Double check your comps and rents. Don’t do any business with your friend - business with friends can turn nasty easily. If everything looks good, then offer $10k or less and negotiate from there. If you can get some good renters in there, I’d hang onto it for the cashflow … $250/month on $20k ($10k purchase + $10k repairs) is a nice deal … 15% annual return.

Check this deal out… what am I’m missing? - Posted by jason

Posted by jason on March 22, 2006 at 14:28:54:

3 bedroom home (poss 4th, need to add closet), city lot, has all new sheetrock (needs taped/mud) i think it was to eliminate lead paint? all new windows, kitchen 1/2 way restored. Basement appears dry, although it hasnt rained in some time…basment is only 5 feet under grade…MAX. has updated electric. over 1/2 of square footage was added on in 1998.

Bank owned 15k asking (they foreclosed for 5k!!! why???). Comps in area selling for 40-55. County tax apraisal @ 45k.

Needs about 8k in work…flooring, finishing sheetrock, bathroom fixtures, roof, furnace, hot water. I will do all but install furnace/hot water

SO, 15k to buy, 10k to fix up, 1 year vacancy allowance at 250/month=3k. (I’m using HELOC, interest only. HELOC + tax+ insurance=250/month)

TOTAL 28k in the deal, assuming I can not rent it for one year. I have a friend willing to live their while working on it a bit, and pay 450/month thereafter…but I’m not COUNTING on it.

28k in it,sell under market @ about 40k, minus costs, netting me about 8k. That’s IF it doesnt rent for 1 year. Otherwise, 500/mo is easily obtainable, so it would cash flow 250/month

What am I missing? The neighborhood isnt great, but for 15k, whaddaya expect. Would be good cashflow property for a new buyer, if I have a tenant in place.

Re: Check this deal out… what am I’m missing? - Posted by jodyks

Posted by jodyks on March 22, 2006 at 22:32:05:

I don’t know what your area is like, but my husband and I started out totally rehabbing properties. That is a lot of hard work if you do it yourself, a lot of time, and a lot of investment money on stand still until you get the work done to sell or rent. After the first several years of hard work, we decided to either do re-habs by paying contractors to do most of the work, to speed the process up (and still make 15k) or change our target property. Now our target property is a vacant property that needs paint, minor repairs and a quick turn around with a month or two max. Life is better, money is better, and RE is more fun! We re-habed 5 houses in about 5 years and the next year we purchased 3 houses in the same year all under valued, and income producing in a 1-2 month turn around. Just some friendly perspective from my side of the property line! : )
Good luck Jody