Buying a property in Van Nuys, Los Angeles

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Buying a property in Van Nuys, Los Angeles

Jonathan Castro
Member since 2018 · 2 posts · 0 votes

I'm interested in acquiring this townhouse in Los Angeles, CA. Asking price is $500,000. It needs about $30,000 worth of work. It is livable at the current condition. The kitchen is partially done, new laminate floors, 3 bathrooms needs updating, no blinds on the windows, needs interior repaint. 

A similar townhouse was sold 3 weeks ago with bathroom, kitchen, and rooms completely rehabilitated in the same building. It was sold at $500.000.

Is this property worth buying at the asking price when a similar property in the same building sold for $500.000?

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  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    Three weeks ago everyone wasn't freaked out about the pandemic. 

    Compare the size and condition of the unit that sold three weeks ago (hopefully the photos are online from the MLS listing) to the unit you're looking at.

    If the unit from three weeks ago is fully-renovated, looks great and is nicer than the one you're looking at then factor that in. 

    Also, you mentioned the unit needed 30K in work. If you bought at 500K and put in 30K and the one that sold three weeks ago went for 500K and was nice, then that would be a risky, risky deal as comps would be 500K. 

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  • Nabil SuleimanBusiness Member
    Real Estate Agent · Los Angeles, CA · Member since 2016 · 596 posts · 299 votes
    6y

    @Jonathan Castro

    Hi Jonathan, What is your primary purpose for the purchase? is this something you will be house hacking, renting out completely, or using as your own primary residence. What Karl said at the end is super important. If you know a completely remodeled townhome in the same complex sold for 500k then there is no reason for you to spend the same as you would be technically be buying over market at that point since the unit you are looking at needs work. Is the 30k a guess or did you have a contractor submit that number to you? Although real estate in LA still has sales moving and moving quick, I would be more aggressive with your offer in todays times. Good Luck!

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  • Jonathan Castro
    OP
    Member since 2018 · 2 posts · 0 votes
    6y

    I appreciate your honest response. The property will be used as a primary residence and the 30K work is an estimate from my agent based on the comp from the property sold 3 weeks ago. 

    Is this worth to place the offer $500K to hold the property? Can I negotiate to decrease the price based on work to be done after inspection? In your experience, would the seller be willing to decrease the price or remodel the property. How would an investor an agent approach this deal?

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  • Jason Franklin
    Real Estate Agent · West Hills, CA · Member since 2016 · 43 posts · 26 votes
    6y

    Unless your agent is referring you their contractor, I would find a contractor and get an estimate from them for a more accurate number. After you have that estimate, i would make the offer minus the work you want done. Sellers normally will not give you money to do upgrades. They will only give you money on things found during the inspection (cracked pipes, structural issues, plumbing, electrical issues, etc) things you couldn't have know by just looking at the property. 

    Also, there is a severe pandemic going on right now so you should have some leverage when placing offers on properties. I would have that conversation with your agent and come up with the right plan for you

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    6y

    First you should know Van Nuys in and out as values can range from street to street in that area. Second, if you have a comp at $500k and another unit needs $30k to get it to a $400k value, why on earth would you ever consider this a deal as you would be paying $30k+ over market value!

    This sounds like a retail deal and not an opportunity for an investor/flipper. As another pointed out above, your rehab estimate needs to be accurate so explaining to yourself how you came up with a rehab budget is super important. A detailed scope of work and a price for each scope is what you need to be sure. That said, asking a contractor to come out and give you a bid on a project you do not have locked up in escrow (at minimum) is typically a waste of time to the contractor and he or she would not be pleased wasting their time. So you need to learn how to do this yourself or pay the contractor for a bid which you should only do if you are certain (or close to it) that you can lock up the deal and close on it. Relationships are key so you don't want to blow it with a good contractor by asking for bids for free on deals you don't have locked up. Just my $.02.

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