To answer your questions the investor was there because he was interested in buying the property but I am also marketing the house as “handy mans special” around town. I would like to sell it to someone who can fix it up and live there or rent it out. If the investor was willing to offer me $35K, I would have without hesitation taken his offer because I would like to take the money and invest it in other deals. Also my uncle is a contractor and he is going with me to the property tomorrow to give me a ball park figure on the repair cost
Thanks for your response and I will keep you posted on this deal.
This past weekend I signed a contract with a seller for a 2 family house for $30K. The CMA for the area is $50-$60K. The 1st floor unit needs painting, drop ceiling put in, which the materials to do the work is in property, tile put on kitchen floor as well as bathroom floor and a new bathroom sink cabinet. The 2nd floor unit is ready for occupancy minus a refrigerator. But for the most part this house is in good condition. I would like to sell it for $42k. I got the contract with no earnest money down and my seller agreed to pay the closing cost.
I had another investor to look at the property and he stated that it will cost about $10-$12k to repair. I find this hard to believe since 4 boxes of lanolium tiles at our local Home Depot would cost under $100, paint will cost about $50-$80 and a kitchen sink cabinet would cost $100-$150. I am not repairing the tosh mahall and this is not a big house. So I know that he was most likely including the labor cost in the $ but I think he was way off base. If the seller would allow me to, I would do some of the work myself. Is there a danger in doing work on a house while it is under contract to be sold? And is this the norm for investor to quote you a higher price than what is required. I know it is better to estimate too high than too low.
If you start doing repairs before the deal closes you are creating a potential “mechanic’s lein” situation especially if you hire work done. I have heard of a mortgage loan officer backing out of a mortgage for this reason as it created a cloud on the title.
What is the tosh ma hall and why is it expensive to fix?
ann,
I would not do any repairs to a property I do not own or control.
If you merely have it tied up with a Purchase agreement, and NO earnest money, with a liquidated damages clause, then you should continue to attempt to sell it, either wholesale or retail.
This way, should you not find a buyer, you lose nothing.
What if you did the repairs and the deal does not close? You’d be out whatever amount you spent, not to mention the time to do the repairs as well.
And, what if you do the repairs, and the seller backs out for some reason. You’d have a hassle on your hands getting that money back also. (although there are ways to protect you from that as well.)
Something I learned the hard way is to always have a good solid exit plan for the deal.
And to make sure your repair estimates are accurate.
So not rely on someon else numbers, especailly a prospective buyer.
Honestly, think about when YOU negotiate a deal.
Do you really tell the seller that you can get into the deal cheaply and make repairs for little money?
And if the seller thinks the home needs repairs, and is not sure of the cost of those repairs, then of course you will offer your opinion.
That is just plain good negotiating.
I’m not clear on a couple of things…first, what was the role of the investor you had estimating costs? If he is a potential wholesale buyer of your deal, then, you can throw his estimates out the window. It’s in his best interest, not yours, for him to overestimate repair costs. Now, if he was just doing you a favor and has no interest in buying the property…that’s another story. But I would still get another opinion from a contractor/subcontractor that would be doing the work. Also, I’m not clear on what you are intending to do with the property…retail it or wholesale it. If you’re planning on wholesaling it to an investor/rehabber, you’re not leaving enough profit in it for him/her. You’d probably have to let it go at around 35k(assuming that it will only take about 5k to repair). Thus, you would get 5k for finding the deal and wholesale flipping it. Not bad. Now, if you’re locked in on getting the 42k, you would probably have to advertise it in the paper and get a handy owner-occupant that just wants to save a few bucks and doesn’t mind the work.
Just my 2 cents. Let us know what happens.
kf
Taj Mahal, not Tosh Ma Hall - Posted by Greg in Dallas
Posted by Greg in Dallas on January 22, 2000 at 01:47:55:
It’s pronounced ‘todge mu hall’ but spelled Taj Mahal.
You can find out more about the Taj Mahal by visiting the following website: Taj Mahal - A Tribute to Beauty
It describes the intricacies with which this building was built.