thinking about putting an offer in, but a few questions

I found a nice cheap place relative to comps in the area, but it needs a lot of work (maybe $50,000). It's been on the market for one month and the bank has already lowered it's price. Now if I fix it up it's still cheaper than average comps by about $50 per square foot. I still live at home so I can do all the work before I move in. I plan on living there myself when it's complete and maybe even putting it on the market just to see if I can make a nice gain. If no one buys it, no big deal I'll just have a nice house to myself. What do you guys think?

Edited: 06/26/2010 at 05:36AM

Melissa G.

· Maryland

34 posts
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Aug 02 '08, 01:22 AM

Not sure what your few questions are, but if you think this is a house you'll be happy living in, why not give it a try.

Edited: 06/26/2010 at 05:36AM

Jeff Hamilton

Real Estate Broker · Springfield, Massachusetts

1 post
50 influence

Aug 02 '08, 02:04 AM

Have you look at all of the pros and cons.

- What will your out of pocket $ be?
- $50K rehab is a big investment.
- Who will be doing the work on the property for you?
- Holding cost, holding cost... You have to have an exit stratergy in place before you begin. If you try to sell for a profit and can't or don't sell living in it doesn't make it a good investment. You will be paying a mortgage, etc. all expenses that can offset any potential profits. However you will qualify for all the benefits of a home owner. Equity will come and go. You have to know your market to determine the value conditions at this time. Are they up or down?

Edited: 06/26/2010 at 05:36AM

Ryan Steele

Real Estate Investor · Chicago, Illinois

957 posts
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Aug 02 '08, 03:30 AM

Hey Cobbler,

Park Ridge, huh? I live in Wrigleyville. So are you interests just this property or further in RE.

You mention it needs 50k of work, but is that your estimate? Have you ever done rehab work before and understand the costs, any potential permits, etc.

While you might save money doing it yourself, please calculate in the holding costs while working on the property that you might save by having it done by a professional as they do it better quality and faster!

When you try to sell it, are you thinking of utilizing a realtor or going FSBO. If a realtor, don't forget to add in the realtor fees. Although most of the time, those fees are paid off by selling faster than if FSBO.

Anyway, I see this is your first post, so welcome fellow Chicagoan to the boards.

GO CUBS!

Edited: 06/26/2010 at 05:36AM

Gregory W

Real Estate Investor · California

34 posts
1 award
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Aug 18 '08, 02:03 AM

Originally posted by Bryan P

I found a nice cheap place relative to comps in the area, but it needs a lot of work (maybe $50,000). It's been on the market for one month and the bank has already lowered it's price. Now if I fix it up it's still cheaper than average comps by about $50 per square foot. I still live at home so I can do all the work before I move in. I plan on living there myself when it's complete and maybe even putting it on the market just to see if I can make a nice gain. If no one buys it, no big deal I'll just have a nice house to myself. What do you guys think?

Would be helpful to see some numbers...i.e. Sale price, written repair estimates, ARV, comps, etc.
Offer the bank 50% of the asking price and if they counter-offer anything over 55%, walk away...it's not a deal...in my opinion.

Edited: 06/26/2010 at 05:42AM

Larry Shapiro

Real Estate Investor · Plymouth, Minnesota

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Aug 19 '08, 09:51 PM

It makes a big difference whether you plan on living in the house or selling it. My first few houses always came in more than I budgeted to fix them up. These houses usually need plumbing and electric updates which tend to be expensive in older homes. Make sure you have some good estimates of your costs before you buy.

Edited: 06/26/2010 at 05:43AM