I need advice from you more experienced folks. I am only recently getting involved more aggressively in rehabs, (flips and rentals) and possibly wholesale deals if the property is ripe for that.
Here is what I found:
Small New England town (population 2,000) about 45 minutes from the nearest small city (pop. 16,000). Lots of larger colonial homes, known for wealthy summer residents. The locals have to travel to work as no industry in this small town.
Here's the details:
Bank owned, sold as is thru an online bidding site. Auction ends Monday afternoon. Town hall closed until monday so couldn't get any info yet except online tax card. Tried to find the previous owner but no luck. (I usually try to call them and ask questions about property)
Single family, 6 bedrooms, 3 1/2 baths, 4767 sq ft.
drilled well, private septic
Taxes almost 6,000 per year….yes six thousand.
Good school district. 3 acres, much of it wetlands but dry around house.
Built 1865. Colonial, wood frame and siding. Needs paint and possibly a new roof.
Stone foundation, cellar appears dry. dirt floor in cellar
100 amp circuit breakers. New wiring in barn and ell.
Heat. wood, electric baseboard in some rooms, oil furnace which is a lennox giant behemoth that does not look like it is in working order. No service on it since 1996.
Huge 3 story barn in great shape. Looks like someone was starting to put an apartment in the barn and a summer apartment in poor shape is in the ell. The main house has essentially no kitchen as the small kitchen is in poor shape. The main house has few upgrades but is classic new england with 3 fireplaces.
Bathrooms are small and seemed to be redone in the last 15 years. Would need cosmetic.
Price? Assessed at $512,800. Listed for $135,000. One bid online so far at $99,000.
If I were to bid and get the property, I would want to wholesale first but have never done this and don't have anyone I know who is an investor. I could pay cash for the purchase but if I could not wholesale, I estimate the house needs about $20,000. to get it ready to rent if I need to hold it. About $30,000-40,000 to flip.
The only other comp I see locally is another large colonial that has no insulation, no upgrades, no kitchen, needs just as much work if not more, listed for $150,000.
Please advise, those of you with experience. I slept rather fitfully last night thinking about what I should do.
Not a big fan of using Hubzu. If you look at their policy just because you win an auction doesn't mean you'll actually get the home at your winning bid. They reserve the right to negotiate with you afterward and not sell to you if it doesn't meet their reserve price. Just be careful and read the user policy.
I am not an expert on houses that old, but I would really look at those rehab numbers, a 5k sq. ft house built in 1865 could be a money pit.
Is there a market to sell the house, you say another house in worse shape is listed for $150k, so that gives you more of an idea what this house is worth, but how long has that $150k house been on the market.
Is there a rental market in the small town, or would it be a summer rental only?
Remember your holding cost will be expensive with the size of the house (utilities) and those taxes, if you miss getting it leased or sold next summer you could have to wait another year.
Andy, the other house on the market for 150k has been on for a few months. Was not sold last summer. The ability to rent in a small town is more difficult. I am guessing that $950 per month with tenant paying utilities is conservative. One rental in the main house is year round. The other one is a summer rental and that is more difficult to find a tenant. Hikers and hunters may rent on a weekly basis.
Also, I imagine this house has lead paint. Looks like it.
Katherine, a few things.
First, don't worry about the auction ending on Monday. The $99K bidder has not met the reserve, and there is a good chance they won't sell him the house and will relist the auction. That's very frequently the case on Hubzu. Hubzu is tough to buy from.
As for wholesaling this: the NHREIA.com is the local real estate investor group, if you get it under contract, be sure and go to their meetings on the 2nd Wed, there is a buy/sell where you can stand up and sell your deal. Be sure to bring a flyer if you have it under actual contract. They also have a Yahoo newsgroup you can post the deal on.
But here is the bigger issue: while I see you live in N Sandwich, which is a beautiful area, and is therefore why you are particularly interested in this particular house since it's so close to you, you need to know two things: First there are few wholesale buyers up there. Why? Because there are few end buyers. A quick look at MLS shows only 10 sales in all of Sandwich in the last 6 mo, but there are 39 properties available. That's about 2 years of inventory. That's actually not bad for rural NH. But be prepared to hold it for quite a while. And as for wholesaling? I can just about guarantee that every real estate investor in NH has already seen it on Hubzu. If they wanted it, they would bid.
Next, the house is a white elephant. 6 Bedrooms? Almost 5000 SF - The heating costs are going to be enormous. And the renovation costs are almost certainly going to far far far exceed what you estimated. I've owned 1865 houses, that's pretty normal in rural NH, and they are expensive to rehab.
To me, the only way this makes sense is if the town will let you make it a multi-family. You'd need to have plenty of cash to renovate and hold while you rehabbed and rented. And I'm guessing historic Sandwich might not love converting old colonials to multi's.
As for your 150K comp? The only comp listed in MLS as active for 150K is a beautiful in-town colonial, white picket fence and all, needs tons of work, needs to be restored rather than remodeled. And it's been on the market for 507 days. I wouldn't worry about yours selling on Monday.
Sorry to be such a downer on this deal, but don't be in a rush. Sleep easy.
Also, Katherine, do a search on bigger pockets for hubzu - it will be eye opening.
@Katherine Thorndike I just refied an old house built in 1770 with a 5 car garage/barn. The Owner thought we could cashout more because of the barn however there was no plumbing, Water or Sewer in the barn. We were not able to count that structure in the value.
Satisfied with the loan, he did share what a monster it is to rehab anything in his "quaint home".
I see that a lot of buyers are having problems with Hubzu if you're follower their rules you want to have any problems but most investors worry what the reserve is. I have investor friends who buy through Hubzu with no problem, but sometime they call me to see whether I will reach out to my contact at Hubzu to see how quick their deal can closed.
In order to win an auction on Hubzu, a bid must first meet or exceed the reserve price. Once the auction is completed and the reserve price has been met, the bidder with the highest bid is declRed the winner. An auction can sometimes also be won through the "own it now" process if that is an option. No further price negotiations occur after a winner has been declared and the purchase and sale agreement is then ratified between parties.
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