Hi, I'm very new to this and just came across this home: was foreclosed and the bank took it back exactly a month ago, they just listed it.
Asking price $51,000 (2013 appraisal $93,400)
house was built 1930
5 bedrooms split into two units, I'm guessing a 3 bedroom unit and 2 bedroom unit.
looks like it needs floors in most rooms and a ceiling in one room. (possible water damage on that ceiling so makes me think roof repair or new roof is needed.
I don't know where to find out how much taxes will be?
rents I'd guess 750 for the two bedroom and 850 / 900 for 3 bedroom. it's a C / C+ area
so $1600 coming in - 50% rule means 800 to pay mortgage. mortgage calculators tell me it will be around $400 a month for the full $51,000. that leaves me with around $200 per unit cashflow.
now it obviously needs repairs Ive seen from pics but maybe more, I don't know how to guess that price so I'll just say $15,000 worth of repairs needed.
purchase price of $30,000 maybe $35,000 might make it worth it.
Any thoughts , guidance , help of any kind would be great. I have never bought a property before and have just been soaking up knowledge from bigger pockets.
You shouldn't guess your numbers. If you don't know something go find the answer to it. Guessing will get you out of this business before you even get started
taxes can be found on the tax card, go to the tax assessors website or just type in 123 main street, city, state zip tax card. You will find it.
you forgot insurance
for repairs, call a contractor to walk through the house with you and take notes, also go read J Scotts book on estimating rehab costs. Call local vendors and ask what they typically would charge for a roof.
a rule of thumb for repairs take the square footage and multiply it by 40. EX: 1000 sf house x 40 = $40,000 rehab. This has been a pretty good rule for me. Now that is on a flip. For rental purposes you can probably do 1000 x 30. It gives you a good conservative number. and I guarantee you that if you have a 5 bedroom house 15,000 in repairs is too low
2013 appraisals don't mean anything. What are the comps in the last 6 months to 1 year. Maybe they have increased and you can sell for 110, or maybe they have decreased and it's worth closer to what they are asking.
Don't guess the rents. Go to rentometer.com that gives you a good idea what the average rent and median rent is per bedrooms. A better source is the MLS. Look up rental comps again 6 months - 1 year. If you can't do that, look on craigslist. what are people renting their units for in your area.
Thanks for the insight and rehab rule of thumb tip. One thing I realized is i used the word guess for things i was really guessing (repair costs) and used the same word for things I knew but was giving a range (rent prices for the area) so that might have lead to confusion. The mortgage calculator included tax and insurance per whatever zillow estimated. Rent is pretty accurate and lower then websites suggest and equal / tad lower then other houses in that area.
I'll have to look for the tax assessment website like you suggest.
Hi @James O'Connor - head to the rental properties calculator underneath "Resources" at the top of the page and plug in your numbers there for a more detailed analysis. It'll also give you a good idea of where you're lacking in information.
I agree that 15k is probably going to wind up really low, particularly if you have extensive water damage. Keep in mind also that a house built in 1930 will always have surprises inside of those walls. You'll probably need to upgrade the electrical, might have asbestos, perhaps lead paint, etc.
Most towns in CT are on the Vision Appraisal website, where you can get the field card online. If that doesn't work, try typing in the name of the town and "assessor" to get to the tax info. And finally, you can head to the town hall and poke around. It's always good to know your way around town hall and where to locate various bits of info. You can also check to see whether the property has any existing code violations, what permits were pulled, even whether the 2-family is a permitted use (don't assume that it is). You could learn that previous owners did things to the house and never pulled permits, for example; those repairs would be on you to make it right, as the bank isn't going to do anything.
If you want to get into more particulars concerning this property, feel free to message me and I'll look it up for you.
Yeah the vision website is where i found the appraisal, most recent being 2013. showed $0 for all the purchase prices and no tax info. Very good tips Karin (I don't know how to @ you ha) I didn't even think to check the codes at the town hall. The land use code on the vision website showed it as a two family.
If Vision shows it as a two-family, I'm sure it's fine. Town Hall is the definitive answer, however, and again, a good place to see if there's any history you should know about.
The @ thing is pretty easy ... just type @ and then either the first few letters of the person's name, or a question mark, and you'll get a drop-down menu of names.
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