$180,000 single family in the worst part of town?!?! Get out of here!!

12 Replies

Yesterday sealed the deal on my suspicion that the housing market is near a correction when a home in a particular area of a city was listed for 180,000!! A year ago that same home was $85,000 sold. And of course it was a cash buyer who bought it and is selling it now. 

Rod Desinord, Real Estate Agent in FL (#SL3255845)

Wow, that is staggering.   That sure sounds like an overheated market. I live in Pittsburgh where our median house is 126k.   We can buy houses in war zones for $10,000 all day. I just bought an ugly house in a decent neighborhood for $1.   I flipped it for $4700 and feel pretty good about it.  Your market is crazy.  How on earth does anyone cash flow?

All i see around town are those " We buy houses cash" deals on the MLS for example are far and few @Josh Caldwell :
Rod Desinord, Real Estate Agent in FL (#SL3255845)
Originally posted by @Rod Desinord :

Yesterday sealed the deal on my suspicion that the housing market is near a correction when a home in a particular area of a city was listed for 180,000!! A year ago that same home was $85,000 sold. And of course it was a cash buyer who bought it and is selling it now. 

I don't mean this to sound rude, genuinely don't, but what do you expect?

There are so many people, gurus, websites (including this one), expounding the fact that real estate is easy money. Buy for $x, hold and flip and sell for $2x.

We had one a couple of years ago, a 2 house lot for $19k. We bid $23k (it needed work), and it sold immediately for $23.5k. That guy instantly without doing anything with it put it back on the market for $80k. He must have been laughing that day he stitched us up with his realtor.

Two years later he's still stuck with it, last I saw, still couldn't even shift for $42k.

I am not surprised by how fast it went up, I am surprised by this house  going up that fast which is located in a terrible part of town (War zones you guys call it). I mean think about this property for a second. Due to the socio economical disposition of the people in that area they wouldn't qualify for the mortgage. And people in the middle class stay away from this area due to the prostitution,drug sales, and violence there. So its left to someone who is going to buy and rent. At that price your looking for what 1500 a month in rent? 

Rod Desinord, Real Estate Agent in FL (#SL3255845)

Idk what to say about that one

Just a follow up on this post. That home is still for sale and it has dropped $15,000 dollars. In my opinion it needs to be dropped another $20,000 for it to sell.

Rod Desinord, Real Estate Agent in FL (#SL3255845)

Does it appear that any work was done to the house since the purchase for $85K?  

@Rod Desinord

What are comparable CAP rates or GRM in the area? Sounds like a bad deal. I mean, if it's a war-zone, a CAP rate of 5.6% on the $160k price range would put the rent at ~$1500/mon. wowzers. What do you think it would really rent for?

Zach

1200/mon. and thats pushing it 

Rod Desinord, Real Estate Agent in FL (#SL3255845)
I'm seeing the same thing in my town; lots of "We Buy Houses Cash" signs all over town. Saw this same thing in 2005-2007. The cycle is slowly repeating itself again and everyone wants to be a so called RE investor. Nothing against "flippers", but that's pure speculation for the average "Joe" to think they'll buy at one price and make $20k or so on a quick sale, alls fine and dandy till the music stops playing and your stuck with that "investment" sucking your bank account dry with holding costs.

I am not understanding the conversation here.  It sounds like the place was bought for cash to be sold to a retail buyer.  Cap rates and cash flow have nothing to do w/ it.  Do the comps support that price is the question, but at the end of the day if it doesn't work for you it doesn't matter.  Most places don't make sense for buy and hold.

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