What can I do with this junker? - Posted by Mike M. (OH)


#1

Posted by Richard Castleberry on December 03, 1998 at 23:04:24:

Flip it. Do the contractors in your area
drive the same well equipped trucks costing
around $35,000, that they do here?
This does not sound like a investment for
a part time person.
Find a bank appraiser to get a current value
before you buy.


#2

What can I do with this junker? - Posted by Mike M. (OH)

Posted by Mike M. (OH) on December 01, 1998 at 22:29:10:

Hope everyone had a great Thanksgiving! I haven’t been on here for awhile. I have been (like a lot of people) working my boring 40hr/wk job making pretty good money, and not spending my time working to make REAL money.

Anyway, as my lease is up Feb 1, I need to find a house quick. I’ve been sending out faxes to all kinds of realtors on cheap houses in the area I need to live asking for comps, loan/lien info, repairs needed, seller’s motivation, etc. So I was talking to a realtor, mentioning that I’m a part time real estate investor and he asks if I like houses that need repairs. Of course I do. Repairs almost always point to motivation. So here’s what I found:

The house is in a good, low crime, small town in the suburbs of cincinnati. It’s about 1200-1400 sqft, originally a 4bdrm, 2ba, partial basement, easement on the side of the house for a driveway (and poss garage). Small lot in the village, and it was originally a duplex. It’s totally gutted, down to the studs. No elec, hvac, kitchen, plumbing, nothing. But it’s ready to be put back together. I’m guessing I can get it for about $18-22k. Comps for similar sqft are about $70-95k in the immediate area. It’s a nice place that I wouldn’t mind moving into, but I would need to have it “livable” by feb 1.

Am I totally crazy? I would have to get a loan based on the fixed up value of the house and mess with escrow. Then I would need to hire subcontractors to get in there and put the plumbing, electric, heat/cooling, and walls in. Does anyone have a ROUGH guess how much it is going to cost to totally put the insides back in? I could have the place fixed up, keep my monthly payments low, and sell it in a year or two at retail for $85k, or even lease option it for $3k down, $799/mo $90k option price.

Or my other option was to get it under contract for $18k, and turn around and flip it to another investor for $25k and find something else that needs less work.

Any thoughts?

Thanks in advance!
Mike M.
Cincinnati, Oh


#3

Re: What can I do with this junker? - Posted by Bud Branstetter

Posted by Bud Branstetter on December 02, 1998 at 10:48:52:

You have to get some contractors out there to give you estimates. Use Marshall and Swift or the Craftsman book if you have access and know how. What is the land value alone? It could be as low as 25K to make it habitable. But could run twice that if you upgrade everything including the contractors lifestyle.

My suggestion is to start hunting for L/O’s. You have a guaranteed occupant. It would give you time to rehab this other place and to find a new Tenant/Buyer.


#4

Re: What can I do with this junker? - Posted by DougO(NM)

Posted by DougO(NM) on December 02, 1998 at 08:54:42:

If the deal is good enough, consider buying or renting a travel trailer or RV big enough for you to live in for a month or two while you finish the interior, then sell or bring it back when you are done with it. Otherwise, flip this house and move on to something else. Either way you’ll still need to find a place to live. I vote to tough it out for a few months. As long as it’s only the interior, the weather won’t be much of a factor. Since it’s down to the studs, be sure to have all the plumbing, HVAC and electical updated first, Then a good crew can insulate and throw up sheet rock pretty quickly, followed up with painting and flooring. Good Luck !


#5

I would be all over this… - Posted by karp

Posted by karp on December 02, 1998 at 08:46:31:

I know, I know, I never do rehab stuff…
but consider this as a perfect 203K program.
You buy it and fix it right (ie don’t do the work yourself, better yet call Jerry Greer and have him fly out and hire and supervise a crew to do it all for you)

You simply offer an extra hundred bucks a month to go month to month for a while at your current place.

Lets say it takes you 1 extra month to finish (which if the house is gutted already- I bet it won’t.) I bet you could have the entire thing done for 35K now add your purchase price and you’ve got some instant equity and a “new” house…

I would look into this for sure.

Thanks,

karp
aka Karl Hartley


#6

There is not enough time… - Posted by Jason-DTX

Posted by Jason-DTX on December 01, 1998 at 23:12:09:

…if you need to be moved in by February. That’s 2 months away and you still have to buy the property and then do a major rehab.

If you numbers are correct it sounds like a good flip canidate. What’s your repair estimate? You should be pretty safe if you can get it for 18K.
Jason


#7

Re: What can I do with this junker? - Posted by SCook85

Posted by SCook85 on December 02, 1998 at 18:20:01:

FLIP IT!~ You don’t have enough time to do what you want to with the property. But it sounds like a really good deal. I would try flipping it for what you mentioned and use the profits toward something else. If you go out and find the investors you could have the contract sold in days, and then move on to the next one.

SCook85


#8

Re: I would be all over this… - Posted by John from Dayton

Posted by John from Dayton on December 03, 1998 at 10:49:32:

Karp, Jerry would need to buy an airplane ticket to get to this baby; he could probably walk there from where he lives. Actually Mike if you’re not interested and decide to pass let me know and I’ll take a look at the deal myself. I’m probably less than an hour away.


#9

Clarification - Posted by Bud Branstetter

Posted by Bud Branstetter on December 02, 1998 at 20:48:14:

My sugestion was to find a lease option to live in while you fix up the gutted house. That way you would still be renting and might be able to get some first time home buyer assistance. The rehab property could be done on the 203K program(owner occupants only). If you want to live in it you will know before it would be ready and can find the tenant buyer for the L/O property.

Not knowing if there is real profit in the fix up can make any advice mute.