Steps to buying potential first property

7 Replies

I just got word that a friend of the family wants to sell her 3 bedroom 1 bath home in Tampa for $25,000. I haven't looked into the house much and don't currently have any real estate experience. I have a pretty good credit score and student loans are my biggest source of debt. What would be some of my best financial options for purchasing the house in a timely fashion if this proves to be a great deal?

Your options differ depending on what you intend to do with the property. Live in It? Rehab and resell? Rehab and rent out?

@Amir Judge - Jason mentioned some of the good questions to know. 

1. What is the house currently worth as is? What is the potential value of the house if it were fixed up? 

2. What is the current condition of the house? Does it need any work? 

3. If it does need work, can you do it yourself? Do you know someone who can? 

4.  What is your goal with it? Move into it, rent it out, fix it up and resell it? 

5. How can you pay for it? Can you/do you want to get a loan for it? (not a lot of banks will want to lend that small of an amount). Do you know anyone who would loan you money? How much can you put in yourself? 

6. What would it rent for? 

A 3/1 for $25,000 likely means it isn't in the greatest of neighborhoods, sounds like Sulphur Springs or Ybor or East Tampa if I had to guess. 

If you want to speak more in private send me a PM. I do a lot of what I mentioned above full time, some combination of agent work, rehabbing, finding private money, investing on my own. I don't mind giving you some input/opinions as someone with experience. 

Good luck with it, it sounds like you have a good head start finding an opportunity where you can help yourself by helping someone else. 

@Brandon M. You definitely know the market. You're spot on with your assumptions. It is in a low income area. Ideally I'd like to get it for the rental income. I just got information on the property yesterday. So I have my work cut out for me. But this person is looking to sell pretty soon.

@Jason D. I'd like to purchase the property for my first rental property. I have my work cut out for me as far as deciding if this is a good opportunity or not. It just seems like a manageable amount of money for my first property. Not considering other potential costs associated with this home. 

@Amir Judge so if you plan on it being a rental, the first step is to figure out what it need to make it live-in condition, find out what the value is after this renovations are completed, and figure out if it's still a deal. Conventional bank financing is out because the property is so cheap, no bank will touch it. You'll have to come up with a financing plan and if it all makes sense, make an offer. Good luck, my friend!

I would definitely research the surrounding area and see what rents are like. Once you figure out how you will finance (student loans can be limiting) and estimate rehab costs, you can see if you would cash flow.

Something in this price range should have no problem cash flowing but again the risks would lie in the location if this is in a bad area of Tampa.

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