Foreclosure/Auction Deal
Hi BP friends,
I need some advice about a house going to auction in my neighborhood. I am a landlord for 2 properties and am looking for another, although for my next one I will have to use cash (HELOC) in my residence to buy a rental. So I have to be very careful and sure of a return so I can cash out/refi to put HELOC money back.
Again, I want to be VERY conservative in my first HELOC deal.
The house is a 4 BR 1.5 Bth. I live in a mixed income city, but this street is mostly working professionals, and the house comps out at around 170-190k. The house is going up for auction next week starting at 60k. I took a walk over there to take a closer look.
As it happened, the guy renting the place came outside. He wasn't terribly friendly and he had a lot of tattoos and no teeth. He did say that the owner was a bum and that the interior needed "a lot of work" including a new boiler. He said he was renting for $1200 and that the landlord had reduced his rent from $1400. He told me there was hardwood on the floors and he really didn't want to talk much further.
I was surprised to see this type of renter in the house given that the street is very nice and I know a lot of people who live on it. Then again, this is a mixed city and you get all types.
I tell you, I was tempted to offer him fifty bucks to let me inside and am still considering this. What do you BP folks think of that?! Will I be writing my next BP post from behind the bars of our county jail?
This house appeals to me because I know the neighborhood and the house looks decent on the outside. I guess it's silly of me to think of doing my first investment property from auction, but I can't help but feel fascinated by this house. If I could be 100k all in and refi at 200k, wouldn't I then clear 100 in profit, give or take? Obviously these are the roughest of numbers. And of course this assumes I can get the house for 60k and that it only needs 40k in work.
Just wondering what you guys thought. Here's a link to the house in question. And I thank you all in advance for reading. Best, Amy