Would this be a good investment property?

Question

Hello everyone,

I am new to the world of real estate investing and have found a property that seems to be promising. It is currently foreclosed on and the description says they're looking for a "short sale" which I think means they take less money than what is owed?

I am pretty handy so I would probably try to put in a staircase to the upstairs from outside and separate the two levels to create a duplex after doing some general stuff to clean it up a bit like new carpet.

Below is a link, I would love some thoughts from those of you with more experience on what you would do with this kind of property. Or is this a bad deal for some reason I'm not familiar with?

https://www.realtor.com/realestateandhomes-detail/1104-S-4th-St_Effingham_IL_62401_M82291-56466#photo6

Thank you ahead of time

Arco

Jacob Sampson · Answer

In my area I would be willing to pay up to $54k for $900/month in rent assuming it is in a C+ or better neighborhood and is rent ready.  If I estimated $10k in work needing to be done then I would pay up to $44k for $900/month in rent.

Jacob Sampson · Answer

It's tough to answer without more info.  Assuming you are going to buy and hold, it being a "good deal" will depend on how much rent it can generate relative to your purchase and remodel price.  How much rent will it generate?

Just as a side bit of info, if it is up for a short-sale then it is not yet foreclosed on.  This is not a big deal but will add to your education.  The short sale means the owner still owns it and is trying to sell for less than what they owe before the bank actually forecloses on them.  The bank will have to agree to letting the house sell for less than what is owed.

Arco Verhoeven · Answer

The average rent for a 2 bedroom in my area is about $500. So probably $500 for the 2 bed unit and $400 for the 1 bed that we would make to get a total of $900 a month.