OfflineI am so frustrated by a property that I looked at today. It is a 10 bedroom "boarding" house. The outside is very nice, decent condition. It was built in 2005 and sold for 365,000, and tax assessment for 2007 was 341,000. Taxes are high in the area, though I don't know why (about 6000/yr.). It's selling for 44K! I have four people lined up that already live in rooming houses and would be moving in on a "permanent" basis. Their rent would take care of monthly obligations (including utilities). The other six rooms, when rented (on a weekly basis) would be profit, and at full capacity I could make over 2500 a month. The property is 4000 sq ft. and has large bedrooms and several common areas. Anyway, I wanted to give it a look. I absolutely cannot believe the condition that the inside was in! Obviously, there have been squatters in there for some time and it was a mess. There was literally feces in the floor, trash everywhere, evidence of crack smoking, etc. Of course everything possible had been stolen and most of the windows were broken. Holes were ripped in the walls and ceilings, I'm assuming they were stealing the wires/copper. I just can't believe it. How/why do people do this??!!??!! Like they are animals, not even human! Anyway, I just think the amount of work may not be worth it. I know the holes are easily patched with sheetrock, and I expect to have to replace carpet and repaint, but I'm just worried about what was BEHIND the walls/ceilings/etc that may have to be replaced. And how can someone sell something in such a nasty condition? Shouldn't they at least have to clean out the trash? UGH - just venting....
Emily
ECC Investments, LLC
i dont know what area your in but maybe u can find a junk man or a cleaning service to take care of all the bad stuff and once thats done u can find a cheap contractor to fix the parts that need fixing i mean if dont have to be there to deal with everything u know what has to be done maybe you can find cheap labor to get rid of the nasty stuff
What you need is a contractor/investor who doesn't mind buying serious rehab investment properties. So far all I can find is investors who will buy homes that need only cosmetic repairs.
Maybe you can find a contractor who buys serious rehabs...that is if you are going to lock the house up on contract.
I know what you mean about the feeling of looking at houses that are just litterally destroyed by people who have no care whatsoever about peoples property. I look at so many houses like that every week. About all you can do if you are interested is offer them what the land is worth.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
how do u find out what the land is worth can u explain that proccess to me
Yes, Emily, some properties can be worth only $11 per square foot.
That one is a prime example of what can happen with poor or no management, and any boarding house needs management living in or very close to the parcel. If the appearance of the place really disgusts you, maybe you should shoot for a place that will attract higher quality tenants. Let's face it, some people just aren't worth renting to.
After several years of doing middle to lower end apartments, we got used to an occasional tenant who left the place very messy, holes in walls and doors, and in need of major renovation. Our policy was to start at the front door with a rake and trash bags, work our way through the unit, and then be able to see what it really needs. Not everyone can (or should) deal with that.
With that low a price (check the assessor's land value to see if it is over $44,000) you'd have to expect a lot of cost to refurbish the building. Are you sure you'd even want to deal with that? It could be that the previous owner couldn't handle it, and a good manager could make it work well. Or it could be that the location is poor and won't attract decent tenants, and it would be a waste of time, money and effort. That's the critical question.
If a bank is involved, they might loan money to fix it up and require a reputable contractor to do the work, or they may be finished and just want out. Interesting situation. Let us know how it turns out.
cactusbob
Hey Emily, don't let it get you down. There are so many other properties to look at. I just laugh when I look at some of the trash apartments that sellers want to deal on. Makes you wonder what their own place looks like!!!...Jan
I would offer them a low ball offer like 24,500 and pay for all the closing costs and things like that. It sounds like it is in BAD shape and by the sounds of it the owner wants to get rid of it as soon as possible. Surprisingly enough, they will probably accept. If you make it so when you sign the contract, ask for a 15 day inspection period, hire a home inspector to see if the wiring and all the stuff "behind" the walls is legit and get an estimate for all new windows, then use the money you saved on the selling price, hire a clean up crew to totally clean the place and then all you have is a little home improvement repair to do to the walls, replace the windows and paint. also you can find GREAT deals on carpet if you buy a ton at a time. This is an opportunity that if you have the time and a little money then you should be able to make a HUGE profit. especially because you already have renters lined up. I would do a little more homework, offer up a low ball offer and see if you can work it. It takes time but this will definitely pay off. Hire an inspector for sure though! Hope that gives you a little inspiration.
Kai
Money won't fall into your hands, you have to earn it!
One way to get a pretty close idea as to what the land is worth (and the surrounding land that other houses sit on) is to go to the local property assessors web site and type in the name of the street that the house sits on.
Don't type in anything but (for example Main) don't type in the word street or North or south or avenue or any of that...only the name of the street. Don't even type in the house address. Some reason the property assessors sites will say the house doesn't exist if you type in anything but the sreet name. Weird huh?
You will see every house ond property on that street and who owns them, appraisers value etc....
OK...then you will see two prices...a land price...and an improvement price and a grand total of the two together. This is the tax assessors opinion.
The improvement price is what they consider the house by itself to be worth in their drive by appriasal. (the house is called the improvement) But now if they were to go inside and take a look at the destruction that drive by appraisal would change on a house like that. But they don't go inside...only drive by's.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Kai
I always put that I need a 60 day inspection period on my contract. After all...all the prospects you bring through the house during your time on the contract are inspecting the property to see if they want it. I try to contract mine for 60 days to sell it.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
If it appears that squatters may have been on the property, this may be a red flag to leave alone. I had a home that I sold in 2005 in an area that I thought was okay. However, the tenants for a few months paid the rent on time and soon stopped paying. They had to be evicted in order to sell the property. After the tenants left the house was burglarized on two occasions before being sold. The area where the house was located, well you could say was crack county. I guess they needed the copper pipes to sell and get their fix. If I were to make a comment to you, I would say buyer beware, and this is based on past experience. I will not like my worse enemy to experience what I have, hence I had to make this suggestion. There are many other properties out there with more potential and less work. Good luck and God Bless.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Thanks to everyone for the comments and suggestions. I have looked at the tax records and the land assesment from that was $34,200 in 2007. The one good thing about the renters that I have lined up, is that they are used to living in such "areas". They also all have worked for my husband for way longer than I've been with him (so over 10 years). So, I'm not worried about the rent being paid from them. Also, one is "family" (NO REFLECTION ON US!!) and would be managing the place. I am definitely going to keep looking at other properties. I'm going to talk it over with my agent as well, when she comes back into town. I'll definitely update with what happens!
Emily
ECC Investments, LLC