To buy or to not buy
Hi! I have been a long-time follower of bigger pockets and making my first post.
I am looking at a property in Columbia, TN (a city with a small-town feel) in middle Tennessee. It's a house in a location walking distance to downtown area and about an hour out from Nashville. This 1942 home is selling as-is, 3 bedroom and 2 bath (however the 2nd bath is not complete, it's just a room...), the previous owner did not maintain this home at all and the whole place is a safety hazard. The home has been on the market for 80 days and it fell out of contract twice, even when they lowered it to $229k.
I have two properties, one that I live in and the other that I rent out. I have not worked on any huge renovation projects, but I am in between jobs so I want to do this as my project for the next 4-5 months. The inspection report shows that there is structural damage (leaning walls on the exterior of the house), needs a new roof, HVAC, windows, doors, and a new deck, repairs to the crawlspace and fireplaces. There is probably mold and rodents' issues too and other "unknowns." I feel enthusiastic about the project and awaiting a quote from a contractor to see what they would charge me. I do plan to do 40% of the work myself (mostly cosmetic and simple) and my husband knows some people who can do certain jobs cheaper.
The question is my agent told me that he thinks an offer starting at 170K is fair and the sellers may meet me somewhere in the 185k zone. After running some more numbers, I think this house needs at least 150- 240k of work done for it to even run comps. The homes in the area are going for $350k-400K(some newer and more sq.ft than this home). My plan is to rent out this home and keep it for a few years and selling when the markets is a hot seller market ( in the next 15 years! I think long term lol). Do you guys think I should run for the hills on this one or try submitting a low-ball offer at 109K cash with no contingencies (except maybe clean title contingency) and see what happens?
Thank you!!!!!
Most Popular Reply
I your offer is $109K or around there then I would make an offer at that price and stick to it. The numbers you gave do not warrant getting into contract at $170K or $185K. If it really will take $240K, sounds like the house needs to be rebuilt? I would get a get the licensed tradesman in there to give you quotes though, since $90K on your estimate is a large swing on the work needed for the place. I would not go into thinking it needs 150-240K I would get a quote from a few contractors, or licensed subs to say it's going to take X to get these items done.
Always run numbers knowing roughly what the rehab will be in todays prices by experience, and then once you are zeroed in on a property get a contractor to really get a full scope bid for you (I would get 2-3).
- Peter Mckernan
