IM HESITATING ON THIS PROPERTY AS MY FIRST DEAL

6 Replies

Okay so this is where I’m at. I’ve been looking for a few months now for my first flip, all the properties I found that had potential where scooped up quickly so when I see something that has sit on the market for a while it makes me think I’m missing something. I walked a property yesterday that is a 4/3 2500sqft. Farm house style Foreclosure that was built in 1930 and sits on 2 Acres. All the comps in the area are 300 or more for the newly renovated properties and they are in demand. Asking price is 80K and They have been dropping the price 10k every month. From what I can see it looks structurally sound, siding looks good windows are okay. It looks like it has septic and well water but that’s to be expected in that area. Oil heat with the tank in the basement but no AC. The electrical panel looks scary and is no way up to code but it is upgraded so that’s a plus and The outlets I could see were grounded too so I took that as a win but i guess it could be knob and tube with newer lines mixed in because there is way to many wires going into the panel. The power lines are hanging down in the yard but I don’t see much more besides some mold from roof leaks and the rest would need to be gutted and re-rocked maybe move a wall or two to open it up for what we are looking to do. So do I put it under contract and see if my number work out and then back out if I have to. I didn’t want to do a deal this big but I feel good about it. Do I walk away or do I push forward and get the inspection done and get estimates. On what contingency would I be able to back out if I just under estimated the rehab??

Get a good real estate agent to represent you. Write up a contract that gives you an option to cancel if you're not happy with the inspection. Then schedule an inspection.

go from there...


@Corey Kenney

Don't be concerned about it being on the market for a while. Most investors have there guidelines for which they invest on. Septic and mold are major things that most people wont take on. It could be that diamond in the ruff. I know of a property in my area that went down $10k weekly and one guy closed on it. Later on at a meet up we find out that another person was dying to get the property for more money but couldn't make it work. There may be many reasons a property is still listed so don't let that deter you. That's why there is plenty of room for all investors to make money!

1930 house...I would expect to run new electrical if your saying there is some knob and tub. So put money for that in your budget. Also what year is the septic? Do they have an inspection in the report? I would also add a contingency for that. All in all kitchen, 3 bathrooms, 2500 of flooring, electrical, Paint finishes etc etc. I still think you cant go wrong on that deal. I'm actually not very far from Delran. Less than an hour. I'm always looking to network with local investors. I know you say this is your first deal but if you get a good budget and schedule and make sure you stay on top of the project to keep it running smooth that shouldn't be an issue man!  

Keep me posted on how it goes. Get your inspections but don't rule anything out. That property stands to make a decent profit! I'm the type of investor who is willing to take on all the major issues partly because I know how to fix them. But coming from me other people know how to fix these things. Just make sure you add a heavy contingency for your budget and if the numbers still work go for it!

Most of what you stated would not scare me away and being on the market long could be a good thing for you. That said, what does scare me is the septic and well. It is very possible the septic system has failed or the well water is not producing, if either or both is the case, you can spend a whole lot of time and money getting that corrected.

As J suggested, make your offer contingent on an inspection, pay for said inspection, get all seller disclosures (ask if the septic & well is properly operating), and then go from there.

I have several experiences with septic systems and in all of those cases, I have regrets of the purchase. One situation ended up costing me six figures which ended up in a six figure loss, another has taken almost 2 years with the city to get the permit for a new one, and the third was in a city where I would never invest again, mostly due to septic. This is not to say that you should not invest in a property with septic or septic issues, just pointing out how deadly (financially) they can be so proceed with caution.

Originally posted by @Will Barnard :

Most of what you stated would not scare me away and being on the market long could be a good thing for you. That said, what does scare me is the septic and well. It is very possible the septic system has failed or the well water is not producing, if either or both is the case, you can spend a whole lot of time and money getting that corrected.

As J suggested, make your offer contingent on an inspection, pay for said inspection, get all seller disclosures (ask if the septic & well is properly operating), and then go from there.

I have several experiences with septic systems and in all of those cases, I have regrets of the purchase. One situation ended up costing me six figures which ended up in a six figure loss, another has taken almost 2 years with the city to get the permit for a new one, and the third was in a city where I would never invest again, mostly due to septic. This is not to say that you should not invest in a property with septic or septic issues, just pointing out how deadly (financially) they can be so proceed with caution.

 I'm with Will here. Septic issues are always big pains in the buttocks.   Make sure to hire a specialist in inspecting well and septic.  I personally don't touch septic properties, but they are also relatively rare where I am with only certain neighborhoods having them, and the area being primarily public sewer.

Thanks gentlemen!

I really appreciate having the input of experienced investors. Even if I know what I know, I still have that doubt in the back of my mind that is raising a flag to play it safe and if I always listened to that voice I would have no chance at ever being successful in anything but most importantly Real estate so I will continue to push on. My Realtor asked me for a dollar amount to state on the contingency basically what amount of repairs am I willing to endure before backing out. I told her I wasn’t putting a dollar amount. Is this acceptable or will I be forced to give a number? I didn’t get a direct answer from my agent. What are we considering repairs in this context? Is bringing the electrical to code a repair, is a new roof a repair, is re sheet rocking the house a repair? What about the moldy Sheetrock is that considered a repair. So I guess my question is are we talking about repairing to code or repairing to a livable state that will be acceptable for a buyer with a mortgage these should be one in the same but I could see how some things may be overlooked, or does this not matter. I have my all in number where I’d like to be plus 25% but I dont know if I could put a dollar amount on the repairs.