All – Getting ready to (hopefully) purchase my first rental property. Found it on a listing site so it would not be through a realtor. Person is asking around 70% of the value, at my initial look there’s some work that needs to be done, new carpets, painting, perhaps refinishing cabinets to help with the dated look. My intention is to perform the work then rent (Buy \ hold strategy).
I’ve done a bunch of reading on here and other sites, just curious what I need to do to minimize my risk in ensuring it’s a fair deal? Going to get an inspection, property is a condo so I will get all documentation and ensure I can rent w/o huge hoops. Will ensure there’s a title search and insurance before closing.
This would be an all cash deal looking to close fairly quickly, just wanting to make sure I’m thinking of everything.
You may want to check on HOA policy if they have material requirements and if you need their approval for internal renovation; make sure you do your due diligent and double check the prices of all material. If you are planning to perform the work yourself and this is your first renovation, make sure you know how things are put together and check 'all' prices. (ie. doing tile means you will need "TOOLS" to cut tiles, mix mortar, place grout. price should not just "TILE' only pricing) those little things tend to be missed during your initial renovation cost.
If everything still adds up right, good luck w/ your first purchase/flip.
Thanks Mike, appreciate the advice. I was not aware Condo Associations could prevent internal renovation, that's crazy.
For what it's worth I will not be doing the work myself. I'll be hiring a GC, getting an itemized contract, and after reading the thread on mistakes never paying before work is completed... that seems to be an important recurring theme/
they might as you to pay deposit for materials, I did this time, but have to watch closely to make sure the work is done.
Are you leveraging this property (mortgage)?
You should spend the money, and get an appraisal if you are not leveraging it -- and find a local realtor to run comps for you. Then you'll have a better idea of the actual value.
agree with @Account Closed ; the numbers will also help you set a limit of your renovation budget and prioritize the renovation items. Over renovation can be costly to your investment as well.
@Account Closed ... So for this particular property the deal has to be all cash (part of the buyers conditions along with a quick closing). I was not planning on getting a appraisal (nor contact a Realtor) , but please correct my thinking if I'm wrong.
My thinking was that using primarily Redfin \ Zillow \ MD Department of records I can get a very accurate history of what has sold in the past year, and for how much. Because this is a condo there's a bunch of valid Comps that are the exact size \ bed \ bath combo. Is there really anything a Realtor could tell be beyond that?
And this property is at a discount (in the 65%-75%) from the comps, so my thought process (and this could be entirely wrong) is in addition to the Home Inspector I'm going to have a GC walk the property with me to estimate repairs. If the numbers don't add up I'll bail.
Am I off on this thought process?
Spend the money and get an appraisal, and also get a realtor to run comps for you. It's money well spent. You need real time market info -- not the history of the property. Then you know what the actual return is. Have you asked any property managers how much it will rent for each month? Good info to know as well.
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