Question for rehabbers - Posted by Ferguson
Posted by Ferguson on May 14, 2000 at 23:57:15:
There’s a property here in austin, tx, that’s been advertised for a couple of weeks in the paper. They want 13,500 down (5%) seller financing. 2 duplexes + vacant lot. rents = 3000, note payment 2525. They say it needs leveling, ‘and other repairs’. For some reason, they’re trying to entice people with the down payment (adjusted down already from 18k), but don’t seem to be budging on the price.
Question(s): What does ‘leveling’ entail? What would motivate them to stick to their price (which represents a rather rediculous cap rate of 7.8% assuming %40 expense ratio), instead of selling off the vacant lot to pay for the necessary repairs?
I understand that the cap rate is a little better within the context of paying off the non-income producing vacant lot, but it still doesn’t seem attractive…
Any hints, tips, or war stories with rehab properties would be helpful… I’m just starting out.