Would this be a good buy?

Question

House with detached apt

This is a foreclosure. Who can help me decide what would be the best thing to do with this house and how to pay for it?

Thank you.

Phillip St. John · Answer

I got a contractor to go by. He said repairs might be 45K. The ARV would be 95-105k. What price would be good to offer for the place. Keep in mind it's 3 units.

Aaron Montague · Answer

Cap Ex and Ops

Capital Expenditures and Operations

Cap ex is the money you need to save to fix roofs, water heaters and furnaces.

Operations is lawn mowing and shoveling.

Though I think I like "oops" better :)

Phillip St. John · Answer

Thank you both. Since I'm a licensed broker, I'm going to try to find other investors to buy it. At 67 years of age and the desire to take my Bible ministry overseas, I'm reluctant to proceed in ways that would keep me here.

Toshia Booker-Blakeley · Answer

Have you done comps to see if it would be better to Flip or Buy & Hold? Paying for it would depend on your current situation financially & ROI strategy.

Tom Mole · Answer

@Phillip St. John I clicked the link. The photos showed a place in fairly deep distress, then I noticed they were apparently taken nearly a year ago. What might have happened since then?

If I were you, I'd go visit the property and make sure it's still there, then I'd peer through the windows. At that price point ($49k) repairs could easily exceed the purchase price. Just saying.

All the best.

Phillip St. John · Answer

I'll figure out those costs. Thanks for the help! What is capes & oops?

Aaron Montague · Answer

@Phillip St. John

...maybe.  How much rent to you expect it to bring in?

I would find out exactly how much the following expense are going to cost you each month. "The tenant pays" is a good answer as well. Put those numbers up here and I'll tell you what I would pay for the place.

Taxes

Sewer and Water

Trash

Heat/Utilities

HOA

Cap Ex and Ops (my personal minimum is $150/roof/month)

Insurance

Mgmt Fee - as a % (general consensus here on BP is 10%. include it even if you think you are going to self manage)

Vacancy- as a %. (8% represents 1 vacant month/unit/year)