Posted by Greg (N.CA) on May 13, 1999 at 10:23:49:
Thanks for the comments, that’s why I posted on this site. I really need to check out the area better and think of other ways of purchasing the properties if I am going to do this…
I have talked to a couple of realtors, but no one seems to know anything(?).
Anyway, thanks again
hypothetical question in Nor Cal (Long) - Posted by Greg (N.CA)
Posted by Greg (N.CA) on May 12, 1999 at 12:55:42:
First of all, let me thank you for any Ideas you might want to share with me. This is a fantastic site, and without it I would not even be thinking about doing the following.
I have found some condo’s that sit within 1 block of a great public park, it has a public boat launch area and the park and the condo’s are very well maintained.
The units are currently selling for anywhere from $10,000 to $22,000 (in California??? Yes!). By the way, this is down from $32,000 seven years ago. They have not yet seen much of a recovery (maybe won’t).
Rents are from $385 to $450 (Realtor says maybe 500)
Association Fees $150
Total units 180 (approx.) all 2bd 1ba
There are always between 1 and 5 of these units on the market every month.
Currently an example would be $18,000. this will be handled through a broker who has no enthusiasm for this complex. I am not able to tell how motivated the sellers are. Also, asking the Broker if there are problems in the area (why the huge price drop?) he says he knows of nothing out of the ordinary.
My credit is not the best, so I am thinking I might make an offer of $14,000 with the owner carrying a 2nd for $4,000. I would then go and get a “hardmoney” loan for a first of 14,000.?
FMV $22,000
offer $14,000
1st $14,000 (64% of FMV so that I get some cash back)
2nd $ 4,000 @ no interest for 2 years
Total into $18,000
what kind of interest rate should I expect to pay on the 1st?
ASSUME:
12% Payment would be 144.01/mo.
Association fee 150.00/mo
Total monthly outlay 294.01
Monthly 155.99 (450 rent)
Exits would be Rent, L/O, or sell on owner contract increasing the asking price to 27000 with 1000 down interest at 12%.
{Future Value added (I know, do not consider in offer): there is a “Disneyland” style park that has most if not all the permits to start construction 10 miles south of these condos. Maybe a rent increase in the future?}
Last but not least, thanks again for any input you have
Greg
Re: hypothetical question in Nor Cal (Long) - Posted by Irwin
Posted by Irwin on May 13, 1999 at 07:40:39:
There are people who say they make a lot of money buying bargain basement condos like this and renting them out; however, when prices are at this level, I always suspect something is very, very wrong.
Investigate thoroughly before buying. Talk to everyone, current owners, tenants, Realtors, neighbors, police, firemen. But whatever you do, get all the facts about the place before buying.
Also consider: How are you going to sell for $27k when the current owner is having trouble getting $18k. Have you considered offering a l/o instead of a cash in order to minimize your personal risk.