Please help with Deal???

Real Estate Investing Single-Family Homes
1

Hello everyone,

PLEASE HELP!!! I recently found a SFH approximately 2400sqf with 4 bedrooms and 2 baths situated in a corner lot with an average city view. Most of the move-in-ready homes nearby are selling for 320K – 450K. After fixing it up, I believe this home could be worth around 350K - 370K. The current state of this property is not very functional since every inch of the house is filled with junks. The house needs a total renovation because the appliances are out of place, doors are slanted, toilets are unusable, unpleasant odor throughout the whole house, etc…The utilities in the house have been shut off by the city due to unpaid bills but the owner still lives there. The basement is unfinished but it has the potential for a 4th bedroom, a play room, and a bathroom to be created. The owner currently owes three years of back taxes and probably liens to the city. I made an offer of 180K on his home but he wants 300K because he thinks it’s worth around 450K - 500K.

Do you guys think I should make a more aggressive offer (200K - 250K range)? In addition, what happen if the owner cannot come up with the money to pay for all the back taxes? I would greatly appreciate if someone can give me some ideas or suggestions on this.

Thank you for your time!

2

This sounds like the ultimate fixer upper. If its worth 350-370 and you might need to put in 100+K to renovate/back taxes your offer should be a lot less. Remember if the house is in this kind of shape, what will an inspector find during their report and behind the walls. Do you know what the costs of the back taxes and liens are because you would assume responsibility if you became the owner. These are just a few things to think about off the top of my head.

3

320 to 450 is a huge difference… You think the house is worth $370? before you even consider making an offer, i’d suggest you get clear on the after repair value of the house… Judging by the square footage, you are most likly going to spend more than $100k in renovations… specially for a house worth half a million, the renovation has to be on the high end…