Question for experienced REI’s - Posted by Dara
Posted by Dara on April 12, 2002 at 16:31:42:
Hello!
I need some advice from experienced Real Estate Investors on a house I am thinking of buying…
I have wanted to get into Real Estate Investing for a very long time,but was married to a lunatic and decided to wait until we were divorced to avoid a big mess,legally,financially and emotionally…well,still had that but to a lesser extent than I would have if doing RI!
I had been into Real estate/buying/selling,believe it or not,when I was 9-12 years old…as well as livestock and horses…my Father was a very smart man…
I have an unusual situation and it has changed since the first time I spoke with the owners…just a week ago or so.
The owners are my neighbors/acquaintances-a couple houses down from me.
They have had,unfortunately a few incidents of sewage backups,2 determined to have been caused by a restaurant at the front of our subdivision…a couple other houses have had minor things happen,not ours,thank goodness in 9+ years…
Well,the Owners had it happen just a week and a half-2 weeks ago,and thank goodness they were home and caught it very quickly and called for help to get it cleaned up asap…which they did…of course,it did get into several rooms and they tore out the carpets (this was a BEAUTIFUL home for this subdivision-they took excellent care of it) cleaned and disinfected,I did not even notice any damage at all to the sheetrock/walls or anything,except in the bathroon/shower they had torn out no smell or anything…but of course,their insurance is taking care of it so they are getting it replaced anyway.
Ok,when I was talking to them a week ago,after that happened (I am going through a divorce finally and getting my house signed over to me alone-my ex decided giving it to me would be better than what was going to happen in court) the lady owner asked me if I wanted to buy her house for $600 a month (homes in our area are between $850 and $1050 a month)…she may have been half joking,or temporarily frustrated because this flooding has happened before,she never did anything about seeing that it never happened again though,such as having the source of the problem determined-she just contacted her insurance co each time and fixed it and forgot about it-her Ins co is threatening to drop her now of course,with 3 claims in a 1 year period of time ( or 2?) but anyway,I thought at first,why would I want to buy a house that has had raw sewage backed up into it,not just once but 3-4 times?? Who would want to buy or rent that? Of course,I did not know that that could be taken care of,as I do now…
We had discussed it originally because I told her about my divorce and that my ex was trying to get me to sell our house,which I was not going to…I am staying in it.
I started thinking again about getting into Real estate now that I am divorced (waiting for finalization-June sometime) and thought that might be a good deal for me,for my first house/transaction,so I went over and paid them a visit…
I found out that they,while the workers were there,found out she had termite activity in the shower in the bathroom,another problem so short a time after their first,such bad luck they have had,but she is getting it treated…the neighbors on the other side also discovered termites the day after in their house and are treating (I am sure mine has them too…geez!I will be calling a co to treat my house as soon as i can also) but I asked her if she was serious about wanting to sell me her house,and she had changed her mind.They are obviously not extremely motivated as the house is 100% paid for,though I sure would be getting tired of the water problem! Of course,they are now taking my advice and filing a law suit against the restaurant the problem is originating from so it will not happen again…
Anyway,she now says she wants to sell the house for CASH ONLY,as she thought about it and decided that would be best and believes she can get full market value for it .She had listed it 2 years ago with a Realtor and they had it listed for a mere $40,000 when it probably is valued closer to 95,000 or so,so what was up with that I have no clue,so she took it off the market.She is the first person that moved in this subdivision when it was built 30 years ago,so I am sure she only paid about that much or less for it…(I am wondering if the Real estate agency may have known about the water/sewage back-up ptroblems and is why they listed it so low,but even that seems absurd to me!)
She said first she wanted $95,000 cash,then said she would take $93,000,of course,she needs to get it appraised first to see what it really is worth,but I think that is close,as mine is worth about that much,and her house is older than mine and her land is smaller.
I told her she probably will not be able to get that for it,especially all cash,(we are in HOUSTON,TX,where new homes are going up all over and are easier than ever to get into with little down so why would anyone pay $93-95,000 cash for a 30 year old place with the history it has?) and considering the history of problems with it which have to be disclosed (though nobody disclosed it to us when we bought our house and it had termite activity in it! I found that out years later!) but she says she just wants to be able to get cash and put it in a savings account and travel and not have to work anymore…well,would we all not want that? Haha!
So after all this long windedness,my question to you is,is there a way I could buy the place from her with all cash,when I have no money,bad credit (soon to be ex ruined my AAA credit,and continues to ruin it by being late/behind on our mortgage payments,and of course I now have to take them over with them behind)little income right now (just divorcing,though I am going in a different direction and have my own businesses and business is picking up a bit ) (and where would I get that cash ?) and either resell it to someone else,as a lease option possibly (as there would obviously be little to no profit if I paid her close to market value) or renting it…?
I know she does not know much if anything about real estate though she believes she does…
She said something about having to refinance it…? Why if it is paid off I wondered…? I am not that familiar with houses that have been all paid off as far as buying/selling…
Can you give me any advice on this where she and I may be able to do this and both of us come out ahead?
Please,if you can e-mail me,as I do not check these forums often, rather than posting here,and if there is a way I can do this or work something almost as good out with her,maybe I can do the same for someone who helps me out with this,someday…
Thank you so much for reading this long boring post! Haha!
Have a great day!
Dara