Hot deal in Memphis

11 Replies

I found a property in Memphis offered up by Fannie Mae. It is now under contract. I have a 10 day inspection on the property.

4 Bed 2 Bath
Neighborhood: B+
Crime Rate: Safe
Schools: Under average
Size: 3400 sqft
Original Listing Price was 225000
My Accepted Bid was 180000 after heavy negotiating and bidding by my realtor.
Earnest Money Deposit: 18000

Repairs 15,000
Most repairs were already done
Terms: All cash offer

I have found 3 properties around the same size in 3400 SQFT+- 10 years construction date that are less than 1 mile away that sold at the following prices in the last 6 months.

$290000
$295000
$345000

However, I still see that there are some houses selling in the neighborhood on Zillow for about 170000 - 225000. (I'm not sure if they need repair or not)

I am roughly estimating that my ARV is 290000. I'm taking the lowest just to be careful.

My plan is to 

1. acquire via hard money with 10% down rent it out and then refinance to get all cash that I put in the deal out via a portfolio lender or delayed financing. Please let me know if my plan sounds solid.

Exit plan: Wholesale if I cannot obtain financing (However I have excellent credit and income to back it up and have cash reserves in the bank).

I have bought lots of property before retail :(, but this is the first time I am trying out a strategy like this with such a good deal and lots of equity. I'm trying to make sure I cover all my bases.

Wow you are brave spending that much money in Memphis. I hope it's in Collierville or East Memphis proper.  High end homes only sell if they are fluffed up to perfection so be very careful with this deal, it may not have any profit in it and certainly wont work as a rental yield wise.

(901) 264-8674

MY gut tells me that if the value is truly $290k a home owner would have locked this one up before you and used a 203k loan to cover the repairs. If it was on the MLS which it sounds like it was as your using a Realtor my guess is value closer to what Zillow states.

I am also a licensed Realtor here in Memphis.  If you tell me the address I will give you my take on what I think the value is.  

Lots of equity doesnt mean much,  I am trying to sell my old personal residence and I have it at $489,900 and the house across the street sold for $695k in 11 days of being on the market and for some reason I cant find a buyer for my home. My home is incredible and the only negative I am hearing is its too big!!!!  

Let me know the address and I will give you a 2nd opinion, you have 10 days to back out.

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

Here is the property on zillow.

I have it locked up for 180000 and posted it back up on zillow for 210000

http://www.zillow.com/homedetails/7684-October-Ros...

Here are the 3 comps I found


7965 Cross Village Dr 4 2 2,944 1977 $235,000 06/18/2014 0.54 mi

2895 Elm Ridge Cv 4 3 2,906 1979 $291,445 06/12/2014 0.62 mi

7581 Cross Village Dr 4 3 3,044 1987 $345,100 07/28/2014 0.2 mi


Also as per my research it looks like I can get 1800 - 2000 in rent for this? Let me know what you think.

Curt will know more than me in terms of specific location as I deal more with investment stock but it doesn't look like a deal to me.

If it is truly only a 2 bed as Zillow says then rent is more like $1100 If it's a 3 then maybe $1400

To get top rent it will have to be super nicely rehabbed and same to sell it. If you're not on the ground in Memphis this is not an easy deal. I only know one high end flipper here and he would expect to spend 100K on average on rehabs so would be buying much better.

(901) 264-8674

@Curt Davis, What do you think of this deal. Is it something I should pursue. Are my numbers correct? I have 10 days to make a final decision on this one. It looks like most of the repairs and fresh paint have already been made, I'm just not sure if my comps are correct. Also in terms of neighborhood would this be a better resell to wholesale, retail or buy & hold. I plan on refinancing immediately after acquisition to recap my costs. Also from the pics I have it does look like a 4 bedroom 3 bath and has a very large backyard and front yard.

@Curt Davis:

Again here are the comps

Comps

7965 Cross Village Dr422,9441977$235,00006/18/20140.54 mi
2895 Elm Ridge Cv432,9061979$291,44506/12/20140.62 mi
7581 Cross Village Dr433,0441987$345,10007/28/20140.2 mi


Originally posted by @Curt Davis:

MY gut tells me that if the value is truly $290k a home owner would have locked this one up before you and used a 203k loan to cover the repairs. If it was on the MLS which it sounds like it was as your using a Realtor my guess is value closer to what Zillow states.

I am also a licensed Realtor here in Memphis.  If you tell me the address I will give you my take on what I think the value is.  

Lots of equity doesnt mean much,  I am trying to sell my old personal residence and I have it at $489,900 and the house across the street sold for $695k in 11 days of being on the market and for some reason I cant find a buyer for my home. My home is incredible and the only negative I am hearing is its too big!!!!  

Let me know the address and I will give you a 2nd opinion, you have 10 days to back out.

Also thanks for all your help in advance.

I would have to agree with dean here, I would call 230 tops here. After you figure in holding cost, closing cost, renovation, and taxes your paying retail. 

Thanks @Curt Davis, thanks @Cameron Ellis. Looks like you were right. My comps were way off on this one. Moving on to the next deal. Wish me luck.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.