Hey BPers! I sent out postcards last week for absentee owners in Denver who were late on their property taxes and I received a call from one guy today who has what seems to be an interesting property, so figured I'd throw it out there and see what you all think.
The owner bought the property in August for $99K and he's put about $40K into it (new roof, new deck, new heater, etc.). It's a 2bd/1ba 750 sq. ft. single-family home on W. Iliff Ave. in SW Denver. It's a tiny house, but it sits on a big lot (.4 acre) so I'm thinking it would be a good buy/hold property for someone looking to rent it out or for potential land development if the parcel of land were subdivided. I looked at what comps I could find, but I don't currently have access to the MLS so these numbers might not be totally accurate ($1000-$1200 for rental or $120K-$150K for sale). Factoring in the lot size and potential land development though, I think he's expecting a higher price....and the fact he's already put $140K into the house. The owner is still finishing up the repairs he started and is planning on selling early next year. He was originally going to move into it, but his plans have changed and he said his money is tied up in another property.
That's all I have for now, but he was very personable and easy to talk to...just wondering if it's worth pursuing? Thoughts? Advice? I'd be interested in passing it off as a potential wholesale deal or partnering somehow with another investor to learn the ropes since this would be my first deal.
@Tara Hall great job taking action! Any idea how much he's behind on taxes? I would pass on it, but maybe you will get some different thoughts here. Keep moving forward!
Hey Tara If he's motivated and you can talk him down at a price attractive to your end buyer.. then I'd say go for it, but either way by you just starting out, just talking and building rapport is good for practice.
@Tara Hall Does he want to sell it? and How much does he want for it? These are the questions you have to ask.
Just because he told you he has $140k into it doesn't mean that he does and it also doesn't mean that he wouldn't take less.
Also, don't post addresses here unless through PM to someone that you trust. Not to suggest that there are a bunch of unscrupulous people here, but share your leads in a more general way to protect yourself at first.
@Bryan K. the property taxes are actually paid in full. I used agentpro247.com for the list and I've found a few of the properties listed as being delinquent are actually paid in full, so their list wasn't the most accurate. It got me the contact though :)
@Ron Drake Yes he wants to sell it, but he hasn't thought about the price too much. He did mention he was thinking around $200K, but I told him that was high considering the neighborhood and small square footage...which is where subdividing the lot and developing the other parcel came into the conversation. He is looking for close to market value and not a low-ball offer.
Lets say that the property is worth $150,000. After selling costs of 7% that would leave $139,500. After subtracting your profit, the end investors profit and holding costs you have the offer price.
As a buy and hold I would want to buy at about $90,000.
In my opinion, not worth waiting.
Sounds like this will be a tough one for investment purposes. But if you're a licensed realtor maybe you can make something out of it by helping him sell it.
I don't think this is a deal.
I don't think this is a deal, either. I agree with Morry Eghbal.
1. 2 bedroom = "Rental", in my opinion, whereas a 3 bedroom could be either.
2. Extra land nothing but extra mowing, unless you could add more units, or subdivide. The idea of a 2 bedroom on a huge lot is not appealing to me. What is a tenant going to do with a huge lot? Truck garden?
3. If Bill Jacobsen is correct and if you could buy for $90,000, this might be a deal. Not more.
@Tara Hall the only way it's a deal is if you can find someone that wants to develop it now. At 17,000 sq ft how many units you can get on the land and what price they sell for is what drives the price. If you can get the land for 20% of the final construction cost, you can likely find a buyer if there are currently new builds in the area. If there are no new builds within 1/4 mile then you are likely wasting your time. He speculated on the land and the market for a bigger fool than he, is fairly small.
Check out the zoning. Drive the area and see if anyone is building.
Thanks everyone for your input!
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