OfflineI just had a nice long interview with this real estate agent who is really interested in working with me. We clicked very well. He showed me this property that is bank owned. It is listed for 495K. He thinks we can at least offer 400k and possibly get it. It has been vacant for about 5 years.
The house is worth about 900k. Do you guys think I should offer on such a house and possibly use hard money to get it going and refinance it once its under my name to pull out some of the money? Then I could either sell it at closer to full value after I have it cleaned up a bit or I could rent out all the rooms at a nice rate and potentially get a few thousand in positive cash flow.
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What is the ARV on this property? The profit margin seems huge! that's awesome.
Together, we can be successful!
Matthew,
How do you know it's worth $900K? The realtor? Did he back that number up with comps?
Vincent
"He who is mighty has done great things for me...He has...exalted those of humble estate; he has filled the hungry with good things..." Matt. 1:49-53
It needs work but not a whole lot. Its just been vacant for a few years so once I have a chance to go see it I will get a better picture on that. At this point my best guess is between 50+k so even if I got it lower then the 495 it will need a bit of work.
I looked at public records for the worth and compared it with zillow and he also gave me the full MLS sheet on it. Its 9 bedrooms and like 7 baths over 8k sq ft.
5 yrs is a long time, I would offer 300k and if accepted have an inspection done and a free estimate from a contractor. That(the inspection) I learned the hard way from my duplex. If it is really worth 900k ARV then you will not have a hard time moving it.
good luck
Richie
That makes a lot of sense I am going to talk to my real estate agent here soon and get a walk through so that I can see what needs to be done just by me looking and you can bet your behind I will getting an inspection done then. Thanks for the advice on that one.
Yeah like Richie said start off offering around $300k and crunch the numbers thoroughly! Remember hard money can be up to 18% interest only, so $4500 per month in mortgage payments on $300k. The HML will need to see how the payments will be made.
If it can be done, lots of potential - good luck!
- Tom
I have a walk-through on it tonight at 7pm. I am bringing my camera to take pics and see if there are any major repairs that are at least visible. If so I can always say no. However if I can lock it up and use hard money and refi it to get some of the equity out to fix it on top of pay off the hard money this could be good. I am super excited and scared considering but I can't be afraid just because the numbers are larger.
The first obvious question is why has it been vacant for 5 years? The second being, why would all the other more savvy investors look the other way if there is 400K+ possible profit potential?
I think your RE agent is hiding something. There can never be such returns in this age of RE enlightment.
It was tied up and just recently came back on the market due to a fraud suit in which about four different people went away for. I confirmed the case when I got home. The agent that is also in charge of the reo is a man who people don't like. Apparently he is very brash. I would use other words but really can't on this site. I will find out when I get there I suppose.
Going on the walk through we learned a lot. This is a custom built home. It has a lot of potential. The problems and why other investors haven't snatched it up is because it is split up very weird like. The home is split into almost like a triplex. Two of them connect to one kitchen. Another one connected through the garage has its own kitchen and a couple of rooms. It seems to need a lot of work. I am thinking of the different ways this would be a great investment from blowing out walls to connect it together or keeping it separate for possible events like weddings. It was a very beautiful home. The separate garage also had a place upstairs where another unfinished living space is. I am thinking it could almost be a house take out 4 of the garage spaces it could be a whole house. The land value alone is worth 300k. The improvements are supposedly worth 600+k but with the work that needs to be done I just don't think so. The price is again 495K and the real estate guy I am talking to thinks we could get it for 400k I just don't want to run into a money pit. I am going to have my grandfather go through it who is a master carpenter who has done similar work and would be able to give me a good estimate on repairs. I am going to try to get him to go through it this weekend with me and he may possibly help me finance it. What do you all think?
Lock it up, lock it up, lock it up and stop talking about it. If you keep talking about it, you may begin talking yourself out of it.
While your at it, focus on your exit strategy and not on the huge equity. Stop considering hard money if you haven't considered all the costs involved.
If your going to go with hard money, you better find one who will allow you to be in a loan program where there are no monthly payments with all payments and interest due at a time period down the road such as when you resell or refi.
Also look at similar properties and their dom, which is days on the market. If there are lots of like homes that have been sitting on the market for a lengthy period of time, you will have signs of your marketplace not having alot of buyers for your product.
If you want to do this deal, flip it for $500,000.00 to a investor who buys homes of this type. Let them come in and do the rehab and worry about holding costs, finding a end buyer, etc.
You could get into this deals and be sitting on a home that you cannot move fast enough to keep yourself out of financial trouble. There have been many many people get into a huge deal and not be able to get out from underneath it.
Also, keep in mind that with no track record, a hm lender might want you to do what is called a cross collaterization, which means pledge another property you own in addition to this property to get the loan.
Good luck to you.
Thanks for the info and something to keep in mind.
So what has happend to this property did you get it loocked up i'm Intriged!
Stop thinking just DO IT!
No it didn't happen
Its all good though I learned a lot. I can't even seem to lock up this house that is closer in and lower in value at the moment. I have to improve my buyers list and funding sources. The hard money I was looking at to potentially lock in this closer deal requires a $150 dollars which honestly isn't bad I just don't have it. Then I tried to bring my grandfather in who is interested in this stuff but he has his money and wouldn't let me use his credit tied up in a house he is building where he and my grandmother are going to go to. Still he walked through and helped me understand some things so the education value is immense and I give myself a pat on the back for learning so much so soon.