Property changing hands often a red flag?

5 Replies

I found a 4-plex near me that cash flows well and looks like a good deal on paper however I look at the listing history and it has changed hands quite a bit recently. -June 2016 Sold -July 2016 Sold for same price -August 2016 Sold for same price Now it's for sale again but listed quite a bit higher. Is this a huge red flag to stay away from it?

@Eric Haug , you should approach EVERY property that "looks like a good deal on paper" as if there's a big red flag SOMEWHERE. It's your job to find out WHY it'd be a good deal in reality - or, not!

It could be that a wholesaler found a buyer, but that buyer realized they'd bitten off more than they could chew, so found a Flipper who did want to take it on. So maybe that Flipper HAS done the work needed, so can justify the higher price, especially seeing as it can still be marketed to owner-occupiers, who get great loan terms.

Or maybe the truth is nothing like that. Maybe the current owner is just looking for a sucker who'll pay extra!

Moral: Never look at pro forma return-on-investment figures through rose-colored glasses. Good luck...

Thanks. I haven't seen the property and there aren't a lot of pictures so I assume something has to be wrong with it. I'm looking to purchase my first property in the next few months and am analyzing lots of properties now. Was curious as to why it changed hands so quickly.

Not necessarily.  For instance one reason a property can have a higher price is it has work done to it.  I would evaluate the deal based upon its current merits and current numbers.

Check to see the names on the transfer. It could be changing hands between the same individual for holding purposes. They could have an LLC or corp that they are quit claiming the deed into for holding.

Originally posted by @Jeff Brower :

Check to see the names on the transfer. It could be changing hands between the same individual for holding purposes. They could have an LLC or corp that they are quit claiming the deed into for holding.

The purchase price would be $0 in those situations. 

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