Hey BP community,
I'm a first time homebuyer that wants to make my first home a rental down the road and I'm evaluating a property in Hurst that I have an opportunity to jump on pre-market.
Here are the details on the house:
1316 Redbud dr.
10+ year old AC/Heat system
4 yr old roof
old water heater
The house needs new floors in all bedrooms and the kitchen needs updating.
Enclosed rear porch.
The comps in the immediate area, based on my rookie evaluation came out around 220k and they want 230k for the house as-is with a lease back option for a couple months to accommodate my upcoming wedding. To me, that price seems high for what the house is and given that there is still a lot of work that needs to be done on it. Am I way off base?
Any wisdom would be helpful and I'd love to make some connections for more learning!
First Time Homebuyer in DFW
The seller wants a full price for a far less than ideal condition. Also, I see no room for any profit for you in this deal, based on known fixes you listed. Be aware more fixes are very likely in a property built in 1965: big trees need trimming, wood siding needs replaced with hardiplank, electric update to code, etc. I wouldn't offer more than 150k on it. Since the numbers don't work in your favor here, I would pass and find another deal.
How long do you plan to live in it? Can you do the updating yourself while you live there? Do you really want to live in that area? It looks like rents in that area are 1400-1500/month for 3/2s. You would have to put quite a bit down to get the payment (PITI) that low since taxes are so high here. Probably not the best move but if you really like the house and want to live there you could always sell it later on instead of renting it. So as an investment-not a good deal. As a personal house, it depends on what you want but still probably not a great deal.
Great neighborhood - I grew up over there and have a few rentals around Hurst. Tax rolls have it at 1600 sq ft, if the enclosed porch makes up the difference, be careful as it needs to have heating/air pumped to it and be done well to be considered as true additional square footage. Fixed up well, that ARV is doable. But I would not buy it as-is for 230k - you are paying retail or higher for a house that needs work.
Also, it has a slab foundation - if the house still has cast iron plumbing, you will be in for some major headaches down the line, or may even need to repipe now before putting in new flooring. In any case, it is worth a hydrostatic test.
I would pass at that price.
Just a couple of ideas.....one is the house you buy to live in is not necessarily the one that is a prime rental in the future. That's my first thought with this house....for a good rental around this parts I would like to see the price point much lower. My goals for rentals is if you pay $220,000 you want to be somewhere around $2000-$2200 for rent.....that might be tough in this area.
So a couple of ideas for you. One is if that is where you want to live.....buy it and live there. Build some equity. Make some upgrades and sell it down the road and invest the profits.
If you want to buy a rental and live in it first....then buy cheaper....much cheaper if you can stand it.
While some people have traditionally bought, then moved, and rented the old house, you can also loose your nice capital gains exemption this way. So something to think about. One bonus is you might be able to use less down payments as you move forward since investment loans might require 20-30% down and owner/occupied loans might require nothing down...or 3-5%...depending on where you buy and your income.
Solid advice from all above.
Right now I would not count too much on appreciation.
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