When is a property not worth buying?

Question

I have the opportunity to get a property under contract for $5,000 or less. Maybe even $2,000 before my wholesale fee. But it will be a complete gut job, and in the end, based on the neighborhood it is in, would only sell for about $40-50k max. I don't know if I should even try to get it under contract. Very few investors want to even touch the neighborhood. It might rent for $800, but the rehab costs would be so high compared to it's ARV.

So, do I bother? Thoughts?

If you're curious, it is in one of the run-down neighborhoods of Warren, Ohio near Youngstown, Ohio. (Think of it like Detroit)

So, do I bother? Thoughts?

If you're curious, it is in one of the run-down neighborhoods of Warren, Ohio near Youngstown, Ohio. (Think of it like Detroit)

Beth Anderson · Answer

Thank you for your input. This one is on Palmyra Rd SW.

Travis Timmons · Answer

There are some properties that I would not take even if the sale price was $1. This may be one of them. The upside is just way too low.

Caleb Brown · Answer

This isn't worth taking for free. Yes numbers could be fine but the area will diminish any return you get. 40-50K ARV is a war zone type area. Might as well light the house on fire

Beth Anderson · Answer

I sent you a message, Marshall. Thanks!

Bob S. · Answer

Come on, really, OF COURSE NOT!!

Marshall C. Call II · Answer

Well I own one on Union Street, not far from that property. I'm getting the 2% rule on that investment. If you can get it rehabbed for a decent price, why not? If you decide against it, I'd be interested into looking at it.

Matthew Crivelli · Answer

This could turn into a nightmare very easily. If the ARV is only 40k-50k there is little to no room for error and you will have a hell of a time trying to get any type of loan. I would pass on this for sure.

Jimmy Lieu · Answer

Hi Beth, if rehab costs are higher than the ARV then it's not worth it and I personally would recommend skipping this deal. Happy to answer any questions you may have.

Marshall C. Call II · Answer

Hi Beth,

I invest in Warren. Which neighborhood is this house in? I have houses in 2 different neighborhoods and I don't have issues but I know there are worse neighborhoods than the ones I rent in. Some of these neighborhoods are on the cusp of rising up and Warren, in general, seems to be improving.

When is a property not worth buying?

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