Hello BP community,
My money partner is out of town and I have two potential off-market deals that I will probably need to pull the trigger on or lose.
One is rentable at $650/month in as-is condition for $55k. It is an 800 sq. ft 2 bd/1ba in a B neighborhood circle off the main street.
The second is a slightly bigger 2/1 that could be expanded. It is completely gutted all wiring pulled out and plumbing replaced. This one would be a cash deal at $25k.
The owners for the $25k house don"t have much wiggle room on price. The owners flipped the house next door and sold it quickly for about $84k. A nice new 2 bedroom could rent for over $900/month.
The $55k house might have some wiggle room, but houses under $100k in the area are swept up usually in less than a week on the MLS. The $55k house probably could use $10k to fix or $25 kto make it really nice (like an airbnb). Houses surrounding are in the $80-$120k range. It could also rent in the $900 range if it is fixed up really nice. If it is just decent it would rent for at least $750. The owner might be willing to owner finance some or all of it with a decent amount down. But I don't know how to structure an offer that way. I thought I could offer $45-$48k cash or $55k with owner financing.
Any recommendations or things I should consider? I am leaning towards the more expensive house because it would take less work to get it ready to go. My partner though has dreamed of doing a full rehab/flip...I am a little worried about the risks.
Thanks in advance for any wisdom you have to share.
@Nichole Ovens after having just completed a gut rehab in Berwyn, IL, I would definitely say go for the 55k house. A gut rehab can easily cost double or triple the 30k difference in prices. This is especially true if your local township is strict like the ones here in Chicago. My plumber, electrician and hvac guys all cost more than 30k, and that was before we began with the walls, floors and ceilings!
One of my partners taught me to always look more at the potential loss of capital when investing. A 10k rehab sounds like a lot less stress to me!
Thank you @john warren and @geoffrey schnake. I like both for different reasons, but also because I keep looking and losing out on deals that have made it to the MLS. The $25k property seems a bigger risk to me, but seems right up my remodeling boyfriend's alley. I can't get both without a partner.
I would like to see if partial owner financing is an option on either. Trying to find out where I can get advice about making offers that include owner financing. I don't like all the fees, points, and restrictions that banks charge and it could minimize the risk between one deal vs. the other.