Ok, House is Worth 42,900. on zilliow the owner has a loan of $60, 400 left to pay the mortgage company. She is willing to subject to the house to me. But Heres the List of Problems
No A/c or Heat the unit is out
Water gets in the basement when it rains,
Model is in the Ceiling in 1 of the bathrooms,
The Backyard has a Pool that doesn't work at all
Heres Whats good,
Wood Floors in the living room
New Floor in the kitchen
It has a Pool in the Ground
the basement has a garage it seems like
and the back deck will have to be replace I estimate the work will cost about 10 k at the most
The property is in a bad neighborhood where value drops constantly
But I want to take over the house and rent it out for her should I take the deal or not
@Rae Remer my first recommendation is to never quote a Zillow value. The site is useful when looking at sold comps in an area around a property you are looking at to get a "preliminary estimate" of values, but not reliable enough to quote their "zestimate" for value. If it happens to be near the right number, this property is underwater and the only thing that might make this property interesting (not considering other factors) is if it were available by way of a short sale where you could purchase it at a more realistic value that has nothing to do with what's owed on the property.
Now, to consider the other factors. No heat/air, a leaky basement, mold issues AND a broken in ground pool could easily run double your estimate of repairs. When doing estimates on your own as a novice, you can expect it to cost twice as much as you think and take twice as long to get it done.
AND it's in a declining value area? There are so many negatives to this property that I think they overshadow the few good things you mentioned. This one is a clear no to me. Keep looking and be patient about getting started.
Yea I am going to have to agree with @Robert Leonard this does not seem like a property a first time investor should jump into. There seems to be just too much to work on. I honestly would pass but if you do insist on going forward I suggest going over it with other investors and possibly partner up with someone that has more experience and is willing to take on that risk. Just something you need to evaluate for yourself.
I want to be sure about the repair cost, my main concern is the values being 42K and the loan being 60K would this deal be a go. If the estimate on repairs is 2K. I purchase the home at 40K from the owner and leave the other 22K in her responsibility. She's like family so I want to help the best way or is selling the property the best thing to do
@Rae Remer , the only way this property can be sold is called a short sale. Unless your friend has the money to pay back the lender the full amount owed after whatever the buyer is willing to pay, there's no deal.
Here's the math for illustration (I have no idea what the actual numbers are): She owes ~60k, the house is worth ~42k, if you subtract ~20k in repairs, now you are down to ~22k of value before you even consider any other costs or possible profit for an investor!
how do I go about getting the actual values of the house. Is there I way I can make money off of short selling the house or is that when she sells it back to the bank for an smaller amount owed.
And Thanks I know your right I just wish I could make a way other then letting it go
What is the ARV? Your heart is in the right place but you're talking about mold in the bathroom and so many other issues. Take a GC in to give u an estimate of repairs and cost that will be needed. Don't forget the estimate for the mold remediation.
I would run away from this property. Many many bad issues, (mold, negative equity, declining neighborhood etc.) and the add to that she is like a family member. It is admirable that you want to help a friend, but this is the type of deal that can make a real family member let alone a friendship go bad.
Good luck with your decision.
To get an estimated value of the house, I would go on Zillow.com or Realtor.com and enter the attributes of that property into the search (square footage, # of bedrooms/bathrooms, etc) and look at what other similar properties in the area are selling for.
I'd also look at recently sold properties (can do it directly from Realtor.com's home page) with similar attributes in that area. Those two searches should give you an idea of what the home's value is.
And a short sale is when the home owner sells the property and the lender agrees to release the lien and accept an amount less than what is owed.
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