Windsor, NY · Member since 2018 · 12 posts · 0 votes
Hello everyone,
I am seeking my first investment property and I came across a listing that looks like it could have good returns, however am weary this could be a money trap.
Does it raise a red flag when a seller wants a cash deal on a house? The house is listed for 39k and it’s a 3bed by 3 bed duplex. Any insight would be appreciated.
Thanks in advance,
Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
8y
@Matt Kistner - @Andrew Johnson is correct. The red flag should be the price of the duplex and most likely the seller is just noting cash only as he know lenders typically won't lend to anything <$50k and he's trying to avoid owner financing.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Matt Kistner It should raise a red flag when it’s $39K :) But, seriously, odds are it will be incredibly difficult to get a mortgage on a $39K property. Most banks have mortgage minimums so it basically reduced the buyer-pool to cash-buyer-investors. Have you talked to a bank about giving you a loan on a $39K property? If you haven’t...make a few calls...
Real Estate Agent · Ankeny IA · Member since 2015 · 89 posts · 34 votes
8y
If you’ve found a duplex for 39k I’d say your rehab would be fairly substantial. I would set up for a contractor to do a scope of work with you or at least have an inspector walk the property. Usually a bank won’t lend on that low of a purchase unless you can do a commercial loan or line of credit. If you have to buy with cash I’d make sure you have the funding for a rehab as well. I feel I live in a moderate area and to find a true duplex like you stated vs a converted the asking prices are usually 150k-200k which would bring in 1000-1200/ month rents per side. Hopefully this helps and best of luck.
Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
8y
@Matt Kistner - @Andrew Johnson is correct. The red flag should be the price of the duplex and most likely the seller is just noting cash only as he know lenders typically won't lend to anything <$50k and he's trying to avoid owner financing.