I'm a newbie investor and came across a property recently that caught my eye - I should probably walk away from it but I thought I would first canvass the views of the professionals - hence my question!!
Looking at a property in W. Oregon - the seller is asking $30K with a APR of about $100K-$110K. - it's a 3 bd, 1 bath - 1,058 sqft on a 8000 Sq ft lot - rentals in the area are commanding about $600- 700 per month.
From what I have been able to ascertain from the seller - the city is requiring the property to be raised. The house has a crawl space and foundation. The roof is leaking (valley of the roof is leaking and a couple of areas of the roof are giving way) and there is evidence of mold in the master bedroom closet and a little in the kitchen. It flooded in 2007 (which was only the second time in 100 years) and the house was remodeled at that time.
It looks like the seller bought the house for $8500 in 2012 (and then realized he had taken on more than he could handle) so I'm guessing that there is a little more give on the price.
Is this one that I should run away from as quickly as possible or is there enough skin in the game to make it a worthwhile proposition - perhaps as a flip?
Would certainly appreciate your advice on this one!
I can't respond on the house but I am wondering what is the flood insurance? What flood zone is it in? When was it mapped by FEMA. If it is raised what would be the base flood elevation (BFE) and insurance rate for flood then. These are the questions you need to ask to figure what it is going to be worth in the end. The ARV may change and the marketability based on these answers. I am not saying don't do it. I am saying be an educated flood zone buyer if you are looking at a house in that area. I would be less worried about mold then the answers to the questions above. Mold can be remediated but these features of the house can't.
I am waiting for our post-sandy Real estate situation to resolve itself. I didn't buy into the house, it was a family thing but I learned a lot from the experience. I think as an investor when you are walking into it do so with clear expectations and a good amount of due diligence.
Thanks Colleen - your thoughts on this are very helpful.
To be honest, I had thought about flood insurance but clearly not as thoroughly as I ought...
Yes the flood insurance situation would need to be answered.
Also, you need to address the city wanting the property raised. Raised as in bring up the elevation or foundation to eliminate flooding to the house or razed as in torn down. Both situation would make a flip to another buyer risky. If you non-disclose you open yourself up for a lawsuit. If you disclosed, an educated buyer is going to start counting the cost.
I would answer those two questions and then post your answer, well advise you from that point.
First off, way too much money for that house. Crawl space could be a nightmere if it's been under water. Can you get in there to inspect? Does the crawl space have a vapor barrier. I am a IICRC certified mold remediator and my best advice is air samples outside, in crawl space and main living area. Mold and bactreria can't hide from an air sample.
Good kuck, Bryan
Phil, I'm a beginner in real estate but I'm an engineer that specializes in protecting buildings from flood and hurricane damage. You could raise the building but it will be expensive. The fact that it flooded twice in 100 years is actually a bad thing. It will probably flood again in the near future. Don't use that as a reason to anticipate a lesser occurrence.
However, if you raise the finished floor elevation to more than 2 ft above the "100 yr flood" zone, you could get an elevation certificate which you can give to an insurance company to reduce your premium. A lot of people and companies do this to reduce cost. If you proceed I would strongly recommend that you check with your prospective insurance company regarding their elevation requirements.
Additionally, if you need help obtaining the most up to date FEMA map, let me know via PM. It's free to find but due to my background it's a quick thing for me to do.
I've learned a ton from this site already and I'm looking for ways to give back.
Take care, Aja
Thankyou all for your input - seemingly the house needs to be raised about 5ft to put it a little over 2ft above the flood level. After that we could get the elevation certificate and hopefully that would greatly reduce the flood insurance tab. I agree though $30K for that house does seem way too much. I was thinking more along the lines of 10K but frankly I'm not sure I can deal with the grief of it all even if I could manage to get it under contract for that sum!!
I would be interested in knowing the value of the land as vacant with enough fill to raise the ground level. This property maybe more valuable if the structure were either torn down or moved to another site rather than raising the house. You might want to look into that.
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