Pics of a $25k SFH rental purchase?

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Pics of a $25k SFH rental purchase?

Tony Schober
TX · Member since 2008 · 22 posts · 0 votes

Great site. I have been reading through all the past posts, and have noticed that many of you like lower priced housing to use as cash flow properties. I am having a hard time wrapping my head around this $25k figure and what these homes look like that you purchase. I find it hard to see someone wanting to rent out one of these places, but obviously they do.

Does anyone have any pictures of one of their lower priced houses, what the seller was asking, and what you got it for? It would really help me put a "value" on the properties I look at. Thanks

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  • Chris A
    WY · Member since 2008 · 44 posts · 0 votes
    17y

    Check out the PROPERTIES link right under the BiggerPockets logo. It will show you several houses that fit this description.

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  • Tony Schober
    OP
    TX · Member since 2008 · 22 posts · 0 votes
    17y

    Thanks Chris. I have looked at that previously. What I'm trying to get a better idea of is what kind of "deal" people have actually gotten and have been able to get a tennant into. I'd like to see an example of a home that was asking $35k, sold for $25k, and is currently renting for $500 - $600.

    I can find plenty of homes listed between $25-$50k, but would like to see an example of a property that has already been through the buy to rent process by a successful investor.

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    17y

    I know that Jon (Holdman) has some pics on his profile of a rehab he had completed. Not sure on the specifics of price though...

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    Tony,

    I've uploaded 3 homes to my gallery. All were under 25K and are currently rented between $550 and $600 per month. Keep in mind, that the location of these homes are in the best area of the city, so I can get more in rents.

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  • Tony Schober
    OP
    TX · Member since 2008 · 22 posts · 0 votes
    17y

    J2,

    Thanks for the direction.

    John,

    Any details on your rehab? Pics of the outside? Costs? Do you plan to resell, or rent? And what kind of figures are you looking at? (asking price, selling price, rehab costs, rent). Thanks

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  • Tony Schober
    OP
    TX · Member since 2008 · 22 posts · 0 votes
    17y

    Tom,

    Nice pics. It's the kind of info I'm looking for. What kind of price did you have to bring the seller down from?

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    17y

    Tom, nice purchases (and even better DEALS!)

    thanks for sharing....

    as far as the rehabs, where did most of your $$$ go? I noticed, with the exception of the first one, that you put in about $3-$4k.

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  • Diane Menke
    Contractor · Philadelphia, PA · Member since 2008 · 183 posts · 17 votes
    17y

    Tom,
    Can you tell us what city you are in?
    Who is your usual tenant?
    These houses look like they were fairly turn key - true?
    What kind of equity development can you expect? By that I mean is the city doing things, or the neighborhood perhaps, that will increase the value of your property? If so what and what is the time line you are looking at?
    Can you tell us a little about why these houses came to foreclosure? What economic events occurred to make these houses available to you?
    Did you buy these for cash or with a mortgage?

    Thanks very much
    Diane

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    Josh,

    Most cost are plumbing, paints, sometimes roof repair, ceiling fans, electrical work. These have been left vacant for 1 to 2 years, which means they are in bad shape. All of them so far have required the missing copper to be replaced by PEX. I usually have to also go through and replace all shut off valves and I always find a split pipe some where in the ceiling or walls.

    I always have to update the electrical in order to meet Sec 8 and city codes. This usually involves new outlets and wiring in some rooms.

    I also include all holding cost into the rehab expense, gas, electrical water and trash. If you are interested, PM me and I can send you rehab lists for each property. I start the check list when I walk through the home for the first time and then adjust it as I go along.

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y
    Originally posted by Diane Menke:
    Tom,
    Can you tell us what city you are in?

    Sorry, no I cannot. There are too many people coming in now who do not know what they are doing and bidding up the prices of these homes.

    Who is your usual tenant?

    Tenants range from blue collar to no income, Sec 8.

    These houses look like they were fairly turn key - true?

    I don't understand what you mean by "turn key"

    What kind of equity development can you expect? By that I mean is the city doing things, or the neighborhood perhaps, that will increase the value of your property? If so what and what is the time line you are looking at?

    Equity comes in at the purchase. Every house I buy has at least 20 to 30K equity after rehab. The city is doing nothing to increase property values. Actually we have been at the bottom for years since we lost our steel industry. We really cannot go any lower.

    Can you tell us a little about why these houses came to foreclosure? What economic events occurred to make these houses available to you?

    Not really. Many people just walked. Some people sucked equity out of the homes, got a buy out from their factory and walked.

    Did you buy these for cash or with a mortgage?

    The first one I had to put down 5K and then mortgaged the rest through my Credit Union. After that I pulled cash out of each house to make another purchase. When you are buying homes for less then 25K, most banks will not write a loan for less then 50K, so cash is your only option.

    Thanks very much
    Diane



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  • Diane Menke
    Contractor · Philadelphia, PA · Member since 2008 · 183 posts · 17 votes
    17y

    Tom,

    Are paying for rehab with a construction loan or cash? I just did an REO where I got a loan 80% LTV on the purchase with another 50K for repairs. Maybe check that out for your situation? You MU the repairs so you can get your cash back when the work is completed. I can give you a breakdown of what we did if you want to e mail me.

    We have motorcycled through Mid Ohio to go to the races there and I am a little familiar with the depressed areas up there. Beautiful countryside. Its so sad to see those mighty factories still.

    Our empty houses here have the same kinds of issues. By the way your plumber bills are cheap! Are you doing that work? PEX is the way to go with these. Smart.

    Ohio is prime for alt energy systems coming along. All those skilled workers sitting idle. Amazing waste.

    I guess for you investing in the long term, you might want to consider what you want to do next. Unless the city gets it together, you will he holding property without an exit strategy for the long term?

    Right now it sounds like the econmy supporting your investment business is section 8 and poor folks. That section 8 money is under threat. Poor folks are getting poorer. But jeez you are sitting on a small gold mine if windmills and similar come back to those factories. I would look into such things.

    Cheers and continued good fortune to you.
    Diane

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    The house in my gallery doesn't meet your criteria. It was purchased for $61,500 and had about $16,000 (too much) put into rehab. It was done using a hard money/refi approach, though since I spent more than planned on the rehab I have some of my own money in it. Rent is $950/month. So, not a great deal, but as I mention in other posts, I like the area and feel it has good prospects. Post fix-up appraisal was $119K.

    I do have another house that meets the criteria, but don't have any pictures. Its in rural MO. Paid $11K, have put about $6K into it. It gets a roof in the spring. Would rent for about $450, I've been told. Currently for our own use. 2/1 about 900 sq.ft., two storey on three acres.

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  • Robin Vidovich
    Real Estate Investor · Reading, PA · Member since 2008 · 227 posts · 7 votes
    17y

    Tony,
    Not all markets are created equal. Most of the properties that I get are between $10-25K with rental rates of $600-725 depending on the area of town(not including rehab).

    Even though I have never been in a personal situation that I have had to live in the types of properties that I own, there are tons of people in lower income levels that need to rent.

    Get over the pre-judgement that no one would want to live in such a property. They may not WANT to but they do out of necessity.

    Hope this helps,

    Robin

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  • Jeffrey K.
    Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
    17y

    Wait, Tom, you really won't tell someone where you live? Maybe I live in a big city, but there are enough distressed properties to go around. I don't see people pushing each-other over to invest in zero growth areas where rent is subsidized by the government and tenants have no money.

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    Jeff,

    I don't live in a big city and yes, there are plenty of properties to go around, but the property that I want, just went up $5K, because someone from out of town out bid me and has no idea what and where they are actually bidding. Also, not everyone is in subsidized housing. The health care industry is huge here. I only had one Sec 8 tenant.

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  • Bob Hines
    Real Estate Investor · StL, MO · Member since 2008 · 296 posts · 152 votes
    17y

    I'll post pics of my under $25k purchase and fixup this weekend as we should finish the painting by then. We will be putting the AC unit in this spring and after that, I expect to have around $23k in it and it should be renting for around $550.

    The area where this house is located is in a gentrifying area where some of the houses have been rehabbed to upscale levels interspersed with lower income houses and rentals. A 1 block range has $400k + properties to sub $10k properties. I would not call this area a warzone as I've seen women out walking their dogs by themselves both early in the morning and after dark in the immediate area.

    There are many houses listed < $25k in this zip code, most of them need extensive work. This house was originally listed at $40k, sat on the market for months as that was not a 'deal' for a foreclosure. Then they dropped the price to $24k. By that time it had been on the market for a couple of months, had only 1 bad picture listed in MLS/realtor.com so many people didn't want to waste their time looking at it. By luck my real estate agent happened to see it and looked at the previously listed pictures after it was rehabbed in 2005. It used to be nice so we decided it was worth a look and we found an overlooked gem. Offered $18k as it had been on the market about 6 months and Fannie accepted.

    I'll also post a listing of expenses with the pictures. I'm pretty proud of my first rental-except it's making it harder to look for a second one :-)

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    17y

    looking forward to seeing the pics bob! congrats!

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  • Kel S
    Real Estate Investor · Toledo, OH · Member since 2008 · 234 posts · 53 votes
    17y

    Here are pictures of our first investment house. It's a 2bed/1 bath with full basement and walkup attic. Before it foreclosed it sold to previous buyer for $82,600. The bank originally was asking $53,900 (I think what the previous owner owned). Then they dropped it to $49,900 and they had a accepted offer but the people could not get financing. So after that the bank dropped it to $38,400 and we bought it for $31k. Very minimal work really. It did need a new water heater and we painted the inside and did some other minor stuff. The house is located in the best school district here and nice neighborhood. We calculate rent could be $500-$525.

    These are "BEFORE" pictures, so the inside looks MUCH nicer now.

    http://www.picturetrail.com/sfx/album/view/20741389

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    Very nice buy Kel. Roof, gutters and siding looks good. Newer widows. Hardwoods look ready to go. Bath just need a little calk from what I can tell. That would diffinitly be a $550 per month home in my area. Did you paint the basement walls? That is something I always do. Tenants and the inspectors like to see that done.

    Nice buy.

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  • Bob Hines
    Real Estate Investor · StL, MO · Member since 2008 · 296 posts · 152 votes
    17y

    Uploaded pictures to my gallery in my profile. Didn't get as far as I wanted to this past weekend in finishing up and cleaning up so you will see all the stuff on the kitchen floor for removing the stains from the grout. I'll get better pics this weekend as I'll be posting this for rent on craigslist next week.

    Here is an approximate expense list:
    $18k purchase price
    $1k closing cost ($450 higher because of sneaky listing agent)
    $1200 HVAC so far, about $1500 this spring for new AC install
    $400 paint (5 gal buckets, extra to be used on next house)
    $400 painter
    $350 Kitchen-Fridge, range hood, garbage disposer
    $150 Copper to replace stolen water lines myself
    $100 Plumber to install water shut off
    $200 Misc-cleaners, light bulbs, little stuff

    So all told I should be around $23,500 into this place.

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    Nice place Bob. Just a bit of advice, that paint job is awful nice for a cheap rental. Next time you may want to go with a Country classic white from Walmart for $64.00 per 5 gal bucket. You might also want to save some time and money by painting all of your trim the same color as the walls. Makes it a lot easier, cheaper and faster then painting the trim a different color.

    Also, what kind shape is your flat roof in? I have had nothing but problems with flat roofs in our area.

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  • Bob Hines
    Real Estate Investor · StL, MO · Member since 2008 · 296 posts · 152 votes
    17y

    Tom,
    Checked the receipt last night and the 5 gal bucket was $59 at Lowes, they can make any color for the same price as white so we decided to make it look nicer. Lowes has plentiful 10% off coupons and I can get an additional 10% off on top of that.

    I understand the paint the trim the same color makes it faster but I still had to be careful of the carpet and ceiling so it really didn't add that much additional time and we thought it was worth the trade off to make it look nicer. I used a taping knife to help me cut in and the baseboards took maybe 15 min longer per room and maybe 30 min longer per room for the crown molding (which was already installed).

    This house is taking a hit on the amount it will rent for because of the shotgun style main bedroom and small second bedroom. If this was a true 2 bedroom, it would be $800 +/-.

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  • John Widing
    Member since 2009 · 4 posts · 0 votes
    17y

    Im currently looking into buying a house here in florida listed only at 25,000.00 , 3/2/2 approx 1400 sf.

    ITs a short sale, dont know what the previous buyer paid, but this house was built in 2006.

    Compairable houses around the area go an upwards of 225k

    There was a fire in the garage, and all damage is said to be located only to this area of the house.

    heres the pic:
    http://p.rdcpix.com/v01/l9bb27f41-m0m.jpg
    http://p.rdcpix.com/v01/l9bb27f41-m1m.jpg
    http://p.rdcpix.com/v01/l9bb27f41-m2m.jpg

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    17y

    wow john,

    where is the house in fl?

    have you seen the garage damage yet?

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  • John Widing
    Member since 2009 · 4 posts · 0 votes
    17y

    No i have not seen the damage yet, Im about 3 hours away from the location, I just found this house two days ago. My partner is going to be looking into it more this weekend.

    I have done some more research into the location today though, and its not as good as I had thought, There are many bank foreclosures of similar homes in the same area, and alot of these homes are being sold cheap, 60-90k

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