There's an REO property in my neighborhood (all built around 1990) that was purchased by the bank for $88k and Zillow estimates it will sell for $95k. Comps in the neighborhood with the same floorplan have sold for $140k-150k. The house appears to be in pretty good shape. I'd bet I would need to put in between $10k-20k at the most and would take me 9 months - 1 year in my spare time.
My idea is to rent out my current home (only a few houses down) for $1600-$1700/month (another home slightly bigger than mine in the neighborhood lists their rent for $1800/month). Running it through the SFH excel spreadsheet I found on here, I would be just slightly less than break-even for the year taking into account potential maintenance, vacancy, etc. But I would be gaining equity in my current home while using my day job to service a lower mortgage on the REO property while I fix it up to either sell or rent.
I'm sure I'm wearing rose-colored glasses right now but it seems like a decent way to build equity in my current home (which we had $50k renovations done in 2012 when we purchased) while getting another property ready to sell or rent. I would appreciate other considerations I should be thinking about while my agent looks into the status of the foreclosure and I get more into the details of this idea.
This would be my first entrance into REI and I'm very excited but want to make sure I cover as many bases as possible.
Well Paul you already said you have the rose colored glasses on so you can expect some things to go unfavorably to say the least. The time-frame of one year will probably be extended six extra months and it will probably be more expense than you expect. I would hold off until I found myself more established financially. If your like I was when I started, I was young with no children and no major family that demanded much of my time. This is a blessing to have family but with a project like that, if you do have them, they will become very bitter very quickly because they may not share your same passion for real estate. Hope this helps.
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