Posted by Eric on June 18, 2006 at 13:31:12:
Eric,
Your assumptions are correct. That in mind if it isn’t completely falling down what might make this parcel make semce. Would a rehab and section 8 work ?
Dump for sale - Posted by Craig
Posted by Craig on June 18, 2006 at 08:10:38:
I’ve noticed when searching the local MLS online listing a dump for sale at 9000.00 This is in a low rent area that is changing ethnicnally. I can’t see any advantage or deal here. What’s your opinion ?
Re: Dump for sale - Posted by John Corey
Posted by John Corey on June 18, 2006 at 11:45:04:
Two things.
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You can set it up on owner financing and it can be a great deal for someone who has steady income but can not afford too much.
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You will not be able to obtain financing secured by the property until the value is much higher. Maybe certain exceptions. The point is the property will never have a lot of value if only cash buyers can buy.
As you said nothing about the area’s average value it is hard to make more sense of the opportunity. I know of areas where $9K is full price for most of the homes in the area. In other areas the lot is worth more so there is potential upside if this can be turned around.
On an absolute basis there is not a whole lot you can do to make serious money. Even if it was to triple or more in value that is rounding error in some other markets.
John Corey
Re: Dump for sale - Posted by michaela-FL
Posted by michaela-FL on June 18, 2006 at 08:27:37:
Craig,
it really depends on the area. Some people make great money being ‘slum lords’. I’m sure you could still get at least $ 200-250/month rent even in a dump (unless it’s not livable. But even then, how much does it cost to make it livable. It really all depends.
A neighborhood changing, if it’s on the upswing, is a great area to start buying, holding and then doing things as the values ocme up.
Michaela
Re: Dump for sale - Posted by Craig
Posted by Craig on June 18, 2006 at 13:05:04:
John,
Thanks for the reply. This neighborhood was low end to begin with and I feel it is getting lower. Comps in this area are 30-50k as of this weekend. Haven’t done a real good inspection yet, but I’m sure it needs considerable work. Hence the as is price. If the neighborhood wasn’t in transition than the lot would most likely be worth the price. I could buy it and bulldoze it and rebuild but can’t see an upside. Am I missing something ? BTW it is in Montgomery, AL See previous post for demographics.
Re: Dump for sale - Posted by Craig
Posted by Craig on June 18, 2006 at 08:44:31:
Thanks for the reply ! I wasn’t sure if anyone would. This property is in flux. The area is changing from a redneck inclave to a black ghetto. What was once redneck blue collar workers is now going to the playas.
I have seen worse places occupied. It is corporate owned and they might be open to a lesser price. Not sure I would want to be a slum lord. I’ve known people that have been there and done that. Just trying to find a way to make a silk purse out of a sows ear.
This property is being sold as is. Not a good sign. The picture of it stands for itself in that regard. If the land was worth that much it wouls be a no brainer. However as I stated before than area is going down hill.
Re: Dump for sale - Posted by Tim
Posted by Tim on June 18, 2006 at 18:38:00:
I live in Opelika, and for the last few years have looked at the HUD homes available for sale in Montgomery. I kept seeing small brick 3/2 homes, or 3/1 duplexs going for what seemed to be ridiculously low prices. However, I have also noticed that a lot of the lower middle class areas over there are going down hill. I think if you had the cash, or could get reasonably priced credit you could buy a pretty good rate of return. The problem is you won’t get any appreciation, and even if you buy way below market eventually the market will come down to what you paid. I have a few houses over in the Valley/Lanett area that I bought 5 or 6 years ago, I feel like this is very similar to the Montgomery market in terms of appreciation. I have been really happy with the cash flow, and now that the KIA plant has been announced I should be able to sell for a small additional profit. However, I had been wondering how I was going to get out of these homes before the KIA announcement. I thought I would either have to take less than I paid from an investor looking for cash flow, or owner finance to people with shaky credit.
If you decide to go for it look at all the angles. First, only buy homes that look bad but need only minor repair. Things like carpet, paint & holes in the sheetrock are ok, stay away from repair of the major systems. Don’t over repair, they don’t need solid surface countertops and tile floors, clean and neat with the basics. Find a good mortgage broker, one that can qualify anyone that can fog a mirrior. If you want to rent keep in mind the number one criteria for these type homes. The tenants live paycheck to paycheck, you want their weekly take home pay to be at least as much as the rent. Last, but certainly not least, buy the homes that are on the fringe of the better neighborhood.
Re: Dump for sale - Posted by Eric (MI)
Posted by Eric (MI) on June 18, 2006 at 13:24:08:
If it is infact turning into a “black ghetto” I would stay away from it. Unless of course you are using a terrible stereotype. Being a “slum lord” per se is not a good thing either but with some cheap upgrades it should be above slum level and be good cash flowing, low income housing.
Of course other factors come into play as well.