Hi all! Major newbie here with tons of questions on a possible stellar deal- Gonna set this up bullet point style and try to keep it concise.
Deal Details: 2.88acre property (desirable mountain area near golf course). 2 homes Zoned R2 single family (for the one property)-confirmed with area lender that these deals are commonly financed. 2 homes, both roughly 3bed/2ba 12-1500 sq ft renting for $700and $745 currently. Both tenants want to stay (most likely wouldn’t once rents increase. Great rental market. Seller asking $185k cash offer preferable. Per sellers agent, “one home is not worth rehabbing. Kitchen floor falling into oblivion.” My request to see the property will only be granted if an offer is submitted sight unseen.
Plan A: Fix and flip both homes, split the lot into two, current market supports a 200-250k return on BOTH!
Plan B: BRRRR and increase rents to market value, $1200-$1500/Mo EACH.
*How do I get around financing difficulties if properties are in substandard shape?
*Would hard money be the way to go even if I joint venture with someone who can front the down payment?
*Should I submit an “all-cash” offer contingent on financing and inspection even tho I don’t have the financing lined up yet?
*Should I get a pre-approval run by my lender just so I have that to show the seller? Along with an offer with contingencies?
ANY advice, recommendations, etc. would be greatly appreciated. This is my VERY FIRST potential deal
“Per sellers agent, “one home is not worth rehabbing. Kitchen floor falling into oblivion.” “
So do we think sellers agent is newer and less experienced than you, are they a total idiot, or just trying to steer you away from the deal with this statement?
Have we considered that she might be right? I don’t think the numbers sound like a stellar deal if we assume the sellers agent is reliable in her analysis. Potential tear- downs are nightmares to estimate for Repairs.
Not sure your state but you could run into issues getting permits for a second if it’s a SFR neighborhood. If it’s grandfathered, then that’s awesome. But Find out.
If you divide - Are there two wells / septic or are they both on city water / sewer? Separate driveways?
It sounds like this is an mls listing since seller is represented. chances are it’s not the stellar deal you think it is.
And to answer your question, if a private or hard money lender thinks it’s a stellar deal they’ll lend to you and it will be a ‘cash offer” , essentially. But you’ll need to bring your own rehab money (or partner w rehab money).
You could try for a 203k loan but not sure if that would work for two houses, and you’d have a hard time trying to subdivide and get one released from the note to sell because the other would have to appraise for at least or maybe more the value of the note.
Keep trying. You’ll get there. This sounds a hard one to finance without a partner.
Thank you for all the insight! I had not thought of some of your suggestions, so I appreciate the input! I don’t believe the RE agent is an idiot, I just know perspective is highly subjective and since he has never done a renovation before, I thought a contractors opinion would be more accurate. A hoarder house can look beyond repair until all the superficial junk is moved out. Just wasn’t sure if anyone had experienced a situation where “not worth rehabbing” turned into a 10-25k fix. If I stand to make 250k on the deal then a terrible kitchen and a 10k lot split might be minor issues.
If anyone has had the same experience I would love any insight.