I believe i found a potential HOME RUN deal, but not sure if i am ready yet..
Here is the situation. i am new to BP and REI. I just wrapped up reading How To Invest In Real Estate the Ultimate Beginners Guide to Getting Started. I have listened to dozens of BP podcast (Starting at Episode#1) since beginning of July 2019 and i tune into basically every Webinar, every Wednesday. I just wanna learn as much as possible as fast as possible. The book talks about getting your financial house in order before truely getting started in REI. I have been working on improving my credit score (since March) as #1 priority, which has been working. If i put on a pair of my wife's heels i would touch a credit score of 700. Since BP came into my life i have been obsessed with scoping out vacant, run-down or any property that looks like a potential investment opportunity. One property in particular has been "my precious". Single family, Split level, Built in 1965, 4Bed, 2.5 Bath, 1780 Sq Ft living space. It's been vacant for about 4-5 yrs. This house is in my neighborhood and i have been jogging passed it for years wondering why has someone let this property sit like this. The other day i stopped and looked thru the windows and saw garbage & debris everywhere. I walked around to the backyard to see a weathered deck surrounding a nasty pool. It needs a new roof, gutters and TLC to the landscape, needs new driveway & sidewalk. All in all from what i SAW, i think its a steal ...at the right price of course. I researched comps in the area that was selling between $250k-$275k. I want to jump on this gem, but where do i start? I found the owners info via the county assessors office but his mailing address is the same as the vacant property. Maybe his mailed is being forwarded...who knows. I have no idea how to estimate the visible repair cost (roof, gutters, landscaping, new driveway, etc.) I typed a letter to the homeowner to see if he is willing to sell. My question to you all is should i even move on this. remember i am new to REI, credit score JUST a hair under 700. Dont want this to be the start of Analysis Paralysis.
i am open to advice BP community...
Here's a thread on how to try to contact the owner. Hope this helps!
I don't think your credit score would be a problem. Though you won't get the absolute best rates. What might be difficult for you is, if you want to roll the rehab into your loan but don't have experience with rehabbing. And depending on the financial institution or Hard Money Lender, you'd need a 20-25% of whatever you are borrowing. Including if rehab funds are rolled into the loan.
For a few highlights of what you'd probably be looking at and cautions. You are mentioning the exterior issues. I guarantee you the interior of that house is just as bad. Probably new kitchen, bath, flooring, repainting, repairs to plumbing/electrical...if not outright having to replace those systems. The works. If you don't have any of this kind of experience, I'd strongly urge you to hire GC. But they aren't cheap. And I'd get a ballpark quote from one before making an offer.
The nasty pool you mention? I've never dealt with something like that. But I've heard just removing the nasty water can be over $10K. So don't overlook that expense thinking it's NBD.
Would your plan be to flip it? Don't forget to include holding costs, closing costs (buying and selling), and realtor fees (selling).
@Jennifer T. Lots of helpful information Jennifer. Yes, I was thinking about flipping it. I definitely would have a GC look at it and give me an estimate before making any type of offer. The inside condition of the property is big question mark, and like you mentioned it could possibly need the works.
You can get an idea on what to expect for rehab from here: https://www.biggerpockets.com/blog/estimate-rehab-costs-wholesaling
also see the bigger pockets rehab calculator : https://www.biggerpockets.com/rehab-estimator
Thanks, Saheed. Much appreciated.
Sounds like a big project for your first one. Not saying to pass it up, just saying it sounds like a big project for a first timer. Either way, welcome to your new addiction and best of luck moving forward.
@Brian Josey DealMachine the address, run an enhanced search and try to make contact with them. Leave a letter on the door, sometimes the owner comes by the property occasionally.
@Brian Josey credit score is not relevant - personally this sounds like a big project for a first project. I recommend contacting the owner and trying to find a flipper for the deal. Some give finders fees, or buy it and see if you can assign the contract. You have options.
Take the step.
@Bryan S. It may sound bigger than what it really is. The exterior repairs in my opinion is typical of a neglected property. The deck/pool seems to be the biggest issue on the exterior. Wish i had pictures to post. But with that being said, I have no clue yet on the interiors condition. I have considered trying the whole selling route with this property. 1st step is successfully contacting the owner of the property.