Need help for my 1st Deal from all you gurus, please (long, but worth it) - Posted by JCP

Posted by JCP on June 06, 1999 at 24:14:57:

The comparables in the area are 90-100k, this house has been rough appraised by a realtor at 81K which is high. I am looking at this as my first deal really because I have been looking and learning for about a year, and I am sick of not doing anything? Am I being too narrow minded?

Need help for my 1st Deal from all you gurus, please (long, but worth it) - Posted by JCP

Posted by JCP on June 05, 1999 at 20:07:49:

Here is the situation, I put the wanted ads in the newspaper, and got a call. I checked out the home this a.m. Here is the scoop.
Nice neighborhood, quiet country area
zoned comm/res, but no big business’ anywhere
Home is owned by a gentlemen who is over 70,
he has owned home for 45 years, and wants cash out, no l/o or short term 6 mo payoff
the home is approx 100 years old.
it is big - 4br, only 1 bath. Kitch, lr, and den
upstairs - needs windows 6-7 sets
floors up are ok, spongy in some rooms, b/c only wide plank 1 layer flooring in most.
roof doesn’t leak, but needs replacing - again wide plank roofing - even can see the tar paper from the inside
the sewer is going to have to be enlarged ( I don’t know much about what is needed. only its cement, small, and old)
the siding is asbestos - not crumbling — can i just side over this??? or is this big $$$
the electrical is old and needs to be updated and replaced (no breakers, no grounds in the outlets, and exposed in some areas)
the cellar is dug and poured to create a 5 foot area
There are 2 attached structures that need to be ripped down or rebuilt — workshop, porch
5-7 year old furnace
2 year old water heater
1 acre of land
The owner wants approx $60,000- for the property

I don’t really know how to approximate the repair costs – This is what scares me.
I thought of renting the prop out – prob 1000 a month rent
I thought of flipping this to an investor or rehaber for only a couple $1000, I would live in the prop if i needed

There is a mortgage on the prop, the owner is finding out the specifics on it.

Please advise, or add comments on this property.

I really enjoy this site, but more importantly, the advice and suggestions everyone adds is awesome.
Thank you in advance. This is my FIRST OF MANY and I just need a push or reassurance.

Re: Need help for my 1st Deal from all you gurus, please (long, but worth it) - Posted by Judy

Posted by Judy on June 07, 1999 at 13:08:35:

This seller isn’t motivated. He won’t even wait 6 months for his money. And, it isn’t like the property is in good condition. I’m a newbie but my idea is that this isn’t worth the trouble.

I’m No Guru, But… - Posted by Hugh James

Posted by Hugh James on June 06, 1999 at 13:16:18:

Joe Kaiser is right (and he IS a guru), what ever made you pick this for a first deal? I know where you are coming from. I have indulged these same temptations myself: Looks like it could be good, senior just wants out, lots of “stuff” to work on and learn about, problems to solve, etc. We LOVE the challenge. But, this looks to me like a challenge that the average newbie shouldn’t tackle the first time out. Maybe there’s a flip here. Here’s the way I understand this (forget the numbers for now): The property needs interior and exterior demolition, wiring, electrical service, roof, plumbing, siding (ooooooh, ASBESTOS!) and I know the interior walls and doors probably aren’t that great. What about the kitchen and bath? And, oh yes – the sewer. On the plus side, we’ve got a five year old furnace, a new water heater ($150 bucks) and an acre of ground. Is there a profit here somewhere? I have no idea. I just think you’re biting off a mighty big chunk for your first project. Bottom line 2 cents: See if you can work something for a few bucks (flip?) and move on. Put your energy into another deal a little less demanding. I have a feeling you’re going to do just fine.

Re: Need help for my 1st Deal from all you gurus, please (long, but worth it) - Posted by Rick Vesole

Posted by Rick Vesole on June 06, 1999 at 10:48:17:

The repairs on this will eat you alive. Cost of windows, roof, siding, sewer, electrical update, demolition of accessory structures, not to mention floor coverings, paint, general repairs, etc, plus holding costs will easily cost as much or more than $30,000-$40,000 difference between your purchase price and market value.

Maybe at a purchase price of $40,000 - $45,000 there is money to be made.

Is this a deal? - Posted by JoeKaiser

Posted by JoeKaiser on June 05, 1999 at 20:41:19:

What made you pick this one as your first deal?

Re: Need help for my 1st Deal from all you gurus, please (long, but worth it) - Posted by Frank [Pgh PA]

Posted by Frank [Pgh PA] on June 06, 1999 at 11:49:13:

I come up with just about the same figures as Rick does. Figure about $15k in repairs [may be a little high, but not much]from your limited [lacking actual square footage]description. If you already have a potential buyer [re-habber?], who would buy it for $45,000…you could make about $3k to $5k by buying it for $40,000.
Of coures, this all pre-supposes that your property value estimates [$90k] are correct.