So there is this little house 968 sq ft for sale in the Texas town I live in. It’s listed for 143k, it is in bad shape. Windows boarded up, floors and walls messed up, etc. Houses in this neighborhood are selling for 160-180k. But this particular house is at the edge of the neighborhood and surrounded by commercial properties. I don’t know how the house is zoned other than just straight up residential but it makes me think there could be big potential with its location. Especially with area growing very rapidly. It’s appears to have been on the market a long time with the price being reduced every few months. I’m new to investing in Real Estate, I’m in the process of saving up for my first down payment on what will be a house hack for sure. Does anyone with more experience have any thoughts on this? I just feel like it could have really big potential. Thanks!
It doesn't sound like a good deal as a residence, and buying it for commercial potential is a naked speculation play, which can be dangerous. You can ask the city how it is zoned but even if it were commercial it has the disadvantage that it has to be demolished before anything can replace it.
Is the house repairable or is it a scrape? If it's a scrape, then the property is land value minus the demolition costs (figure up to $10k for that)
See if you can find the values of some nearby properties to get a feeling of what it may be worth. To me it sounds like a lot of money for an encumbered property. However, I'm not in your market so can't speak to that. How large of a lot does it have? That is probably the largest factor if it's commercial.
First check is to talk to the city to see what it is zoned. It wouldn't surprise me if it was a house zoned commercial which is why it is sitting so long and why it is in such disrepair. It can't be used as a house. If it needs the work you are talking about it does not sound like a good deal at all with the comps you mentioned....
If down payment is an issue it doesn't sound like a good speculation play, your only means for purchase would likely be an owner occupy construction loan such as a conventional rehab or FHA 203(k) which can make things a bit more difficult.
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