Is This Deal Too Small? - Posted by Steve Carlson

Real Estate Investing
#1

Posted by Ed Copp (OH) on February 24, 2001 at 18:46:26:

When you make money fast it’s a big deal.

I had a transaction a while back that was a lot smaller than the one you are talking about. It was like this:

V.A. repo, sat empty 3 years, freeze damage (before the winterized, this is normal) space heater, 750 s.f. 2 br. no garage. Small (dead) town not on the way to anything and not on the way back either. Minimum bid $2,500. There were four bidders, three at $2,500 and my winning bid of $2,510 (there is a message here).

I spent about $100 to get the water on, turned on gas and electric (o.K.).

Put sign in front yard “for sale”, “land contract”.
Sold the house within 48 hours to a young couple with only $2,000 down. Sale price $9,000, Balance $7,000 @ $100 per month till paid. Not sure about interest might have been 9%…

Sold the Land Contract (within 3 mo. or so) for $4,700 (I got robbed), but I needed cash that day.

Pencil out my return on this “too little” deal and see if it is not “good n’uff”.

#2

Is This Deal Too Small? - Posted by Steve Carlson

Posted by Steve Carlson on February 24, 2001 at 24:21:57:

I won a HUD bid yesterday but I’m now having second thoughts. The offer was $12,500 cash for a little 2br 1ba 750 s.f. house in a small town of Texas with max ARV of about $29,000 - it needs about $2-3K fix-up. The house is in a neighborhood of low crime but the houses around it are junk! My concern is the market demand for a house that low priced. Most of the junker houses we buy have ARV’s around $45K-65K and sell within 30 days or so with FHA or conventional financing.

This little deal is on the far end of the spectrum. If I sell with owner financing and sell the note, will note buyers want it? If I sell with a new bank loan will banks want to mess with it? If the biggest demand in our small town is $45K-65K, will there be buyers for this house? That is the dilemma I’m having and if there are others in similar markets with this experience, I’d love to hear from you.

Regards,
Steve

#3

Re: Is This Deal Too Small? - Posted by Carey_PA

Posted by Carey_PA on February 24, 2001 at 10:02:29:

Now Steve, I’m not expert BY FAR, but when all else fails I’d put a RENT-TO-OWN ad in the paper and I bet you’ll have the puppy gone in no time.

Maybe a price of $33K on the place and then of course their rent 10% above market rent for that area. Don’t forget your upfront option consideration. I’m thinking for that type of price range/area that there won’t be much, but ya never know.

good luck,

CAREY