There is a home going up for auction tomorrow that I am considering purchasing.
Currently assessed at $105k and in a trendy/popular location. Listed on real estate websites as a 1 bedroom/1 bath built in 1910 and 1100 sq feet and a detached 2 car garage. My assumption is that this is listed as a 1 bedroom incorrectly and is or could be a 2 bedroom home. I did a drive by and it does show signs of neglect(older AC, needs new windows, addition on rear has roll roofing in bad shape). Vinyl siding needs to be cleaned but is in decent shape.
It is being foreclosed against an estate, and the amount to be raised/remaining on the mortgage is $30k. It appears to have been last purchased in 1974, so I'm expecting to do full updates inside. It isn't guaranteed that I could get it for this price, but I feel like I have enough room to do significant repairs, and will expect to rent it for $1000 / mo.
Terms of sale - $2000 deposit, 25% of bid due in 30 days and full balance due within 6 months with unpaid balance at 12% APR. Sheriff appraised the house at $110k, and if it sells for less than 2/3rds of appraised the owner has 6 months to buy it back for purchase price +10% APR and any reasonable costs incurred for maintenance and repair. Another assumption is that if the estate/daughter wanted to property she would have acted already.
Estate sale in need of repairs(1400 sq ft) a few doors down went for $42k in 2013. Renovated home a few doors the other way went for $170k, across the street(unsure on renovations) recently sold for $133k.
Thoughts? Being Naive on renovation costs? If another bidder besides the bank is involved, how would you calculate a ceiling?
I would value it off of the 1bed/1bath. If there are additions they are probably not to code and that can become an issue for you. If it's a two bedroom, then it's a bonus! :)
There is a big difference in 1400 sqft vs 1100 sqft in terms of desirability. 21% larger house feels a lot more roomy.
I wish you could have gotten to the owner before the sale was locked in. It sounds like it'll be a pretty serious rehab. How long has it been vacant? Has it frozen over, is there power on? I understand that N. CA can get pretty cold.
My personal feeling is that if you are new to this, this is a huge gamble and if I were your coach/mentor/Guru(evil guy from what I understand on the forums), then I would not recommend it for you based on the info I have here. It might be a great deal, but it is a huge gamble. Sometimes you win the bet! I'm not afraid of risk, but i'm not sure you have mitigated the risk here.
I would calculate a ceiling by figuring out the costs for new plumbing, electrical, lead paint and asbestos remediation along with new walls, kitchen, appliances, bathroom remodel...
Have you looked in through the windows at all? Maybe the electric meter is spinning. If someone is there I would knock on the door and introduce myself and ask if they know about the sale, if they are the owners...
Sheriff/tax sales are a lot of work. You want to see each house, even if you cannot get inside.
N. CA is a long way from Kentucky. How did you come across this deal?
Watch out for banks, sometimes they have an interest to bit it way past it's market value. That darned PMI can make them do strange things.
I appreciate the feedback and I agree it is a gamble. I've been sitting on the sidelines enough that I'm ready to jump though. The location on this property is great, walkable(50ft) to a popular restaurant/art row. Windows had blinds in them, so I couldn't see in. I'm curious if I posted in the wrong forum if there is something in the post that has you thinking it is in Northern California, this is in Kentucky, just a mile or two from my own home.
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