Question about "My First Offer" - Posted by Mark

import · January 23, 2002, 9:23pm

Posted by Tim Fierro (Tacoma, WA) on January 23, 2002 at 22:30:49:

If he owes $111k, but wants $114k, and the minimum comp value is $114k, you might end up with buying a house for it’s actual value.

However if you think this house is comped more to the $148k, then there is some profit to be had. You need to review those comps and narrow it down. Seems odd that the comps are that far apart for ‘like’ houses. Make sure you are comparing apples to apples.

One more thing about your $1025 monthly payment, you said if you could find a good prospect within that short period of time; what if you can’t? Do you have holding costs set aside for backup in case you can’t find the tenant quickly?

Make sure there is profit in this deal, and make sure you think of an exit strategy, and a reserve in case something doesn’t go right on time and as planned.

import · January 23, 2002, 9:23pm

Question about “My First Offer” - Posted by Mark

Posted by Mark on January 23, 2002 at 22:23:44:

Hey guys,
I need a little advise. After a grueling 3 weeks of flyers, signs, and calling all the FSBO ads I could find, I have an appointment to look at a house Sat. The seller says that he owes $111 k and needs $114 k over 45 days. The house is empty, and in a nice little starter neighborhood 25 minutes north of town. The original mortgage payment is $1025. The comps that I have found for that area range from $114 to $148k. Is there enough spread in this deal to get maybe $1300 per month, and $10k or $11k down ? He balked a bit when I told him I always begin making payments after 60 days. (Like I have done this before HA) He told me he could make the first, which would give me around 30 days to get a buyer (Leasee). Should I do it to get my feet wet if nothing else. It looks on paper like a nice little profit, if I can qualify a good prospect in a short period of time. Thanks in advance for any input. Success to you all…MS

import · January 24, 2002, 7:26pm

Re: Question about “My First Offer” - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on January 24, 2002 at 20:26:12:

Mark-----------

In my opinion you are not ready to commit to a house purchase. I think it would be ok to look this property over, as a dry run, if you want to waste the time driving a half-hour north of town. But, keep your wallet in your pocket and your signature pen in the car is my advice.

Now, you could change my mind if you could narrow down the market value to a much, much narrower range. This is the main clue to me that you are not at a point where you should be risking money buying. That range of “comps” is just too extreme. From what you have said, it may well be that the property is worth about $125K to $130K, which is probably the central value for the comparables. However, I do not know for sure. AND MORE IMPORTANT: Y O U do not know for sure. Until you can peg the value a house to a range of about $10-15K, you are not knowledgeable enough to be buying, in my opinion.

you also say: “After a grueling 3 weeks of flyers, signs, and calling all the FSBO ads I could find, . . …” Whoa, three weeks? You are not even a “Pre-investor” yet, I would judge.

I suggest that you plan to spend about 6-18 months studying up on real estate investing, your market, the laws, financing, etc related to real estate before you seriously contemplate putting out your money for a property. You don’t know how little you know.

I suggest that you spend some time looking at houses for sale, preferably within less than 20 minutes drive from home. Look at a hundred houses for sale. Keep some notes. Call up to find out what happened with the properties after 2 months, 4 months, 6 months. What they sold for mostly. This is a technique that Bill Green mentions in his “Think Like a Tycoon” book, calling it the “hundred-house rule.”

I followed it when I first got serious about investing in real estate. Until about 50 houses, I was like a blind person fumbling around in the real estate jungle. After that, I began to really know what the values of properties were.

I have a post in 2001 about how to become a successful investor. It is on the CREONLINE.COM main bulletin board at message number 59703. You might want to read JohnBoy’s advice for beginners at message 70929, this year on the same site. In 2001, Paul gave his post for beginners on the Carleton Sheets board2. Put “expert” into the search function there and you can get his expertise.

Good Investing***********Ron Starr*************

import · January 24, 2002, 3:42pm

Re: Question about “My First Offer” - Posted by Shawn MM

Posted by Shawn MM on January 24, 2002 at 16:42:10:

Mark,
I’m a newbie myself, so forgive me, but I really don’t see a deal here unless he were to become a lot more “motivated”. There just isn’t enough room for a profit. If this house can come in at closer to $148,000 than $114,000, then maybe. Also, just my two cents, but I would never do a deal “just to get my feet wet”. Hope this helps. I’m curious as to what the pros would say.

Good luck,
Shawn MM