BiggerPockets

I'm trying to decide weather or not this house will be a good investment for me. It can be purchased for $22,100 And it will rent for $600 per month. I estimate it needs $5,000 worth of fix up to make it rentable. Taxes are $1,600. per year.

So if my fix up estimate is right I'll have $27,100 in it, getting $600 per month rent. Good deal? It is an HUD property if that makes any difference.

Originally posted by Jeffrey Koenig

If your numbers are right, the deal is fine.

And if it is an OK or better neighborhood. No war zones.

If they can get past the blue cabinets (ha ha - in fun) they should be fine with the kitchen w/d. At $600 a month how can they complain? - where is this by the way - I think I need to buy in places other than. Southern CA

Anything under $30K (including rehab) would be fine if indeed it can fetch you $600 a month. I assume it is a low income neighborhood. (Doesn't have to be a war zone...)
Here are couple of suggestions should decide to buy it. Have the rehab done fast (in and out). Some people may break in just to still the materials.
If you plan to install AC unit outside, do it after you find a tenant (Inform any potential tenant that you plan to install an AC unit so they don't think you are renting a steam room)
Those AC units get stolen very easy (Central and windows ones). If you put a central AC unit, make sure you cage it.

Good luck.

Eddie,

I saw your post with the rental from Ohio...you mentioned Alabama some similar properties. I would be interested if the rental pricing is similar. I think his details were 21k and 600per m rental. I have been investing in AZ but 21k will not return 600...so I have been rehabbing larger size homes with some success.

thx

You need to know what its worth. So, you need to have recent, similar comparable sales.

As a rental, its a great deal, assuming the things others mention are ok (not a war zone, can get tenants, etc.) I'd paint those cabinets. I wouldn't worry about the W/D hookups in the kitchen, unless that's unusual. Pretty common for post war ranches around here.

If comps show this is worth a higher price, you need to bid higher to get it. If comps show other similar properties are selling for $15K, you can bid lower.

The HUD company here publishes the bid results. It takes a couple of weeks before they show up, but you can see what the accepted bids. If its the same there, you can spend some time looking at other bids and get an idea of what it might bring.

If you bid on a HUD and your bid is accepted, your earnest money is committed. At least here, and I think its that way everywhere. Do your inspections before making the bid. Doesn't matter what you find after your bid is accepted, you're not getting the earnest money back.

Originally posted by Jon Holdman

If you bid on a HUD and your bid is accepted, your earnest money is committed. At least here, and I think its that way everywhere. Do your inspections before making the bid. Doesn't matter what you find after your bid is accepted, you're not getting the earnest money back.

I didn't know that, I was under the impression that after I put down my earnest money I had a chance to have the property inspected, and if there was for example a bad HVAC system, I could get my earnest money back.

Also, does anyone have an opinion on the converted garage? Do you think it adds or detracts anything from the property?

for the bid amount it really depends on the shape of the house and how active your market is.

around here (central ohio) its really active and lately everyone is buying everything. To get a good deal I will over-bid by atleast 1,000. Last house I over-bid by 2,000 b/c I know it will bring me back SOOO much money 2k isn't nothing.

Think about the money you'll make and the profit to get your numbers. Then you'll know what your max bid can be.

It should work Brett. Don't go crazy on rehab. From what you shown you're rent ready condition now with a little cleaning. I would consider even leaving the blue cabinets but if you decide to repaint them give them a couple coats of Kilz and they'll be fine.

Check the market though. I used to think 25k properties by me were a deal until I figured out what I could get for 8-10k. Sure I could rent the 25k ones for 600-700 a month but found I could rent the 8-10k ones for 575 a month. 700 a month vs. 1150 a month (575 X2)......

IDK how HUD works, but I always have a home inspection even though I work in construction and PM. It is always good to have another set of eyes.