Real Estate Investor · Fort Myers, FL · Member since 2014 · 50 posts · 4 votes
Hey guys!
Looking to buy a single family home as a primary residence while renting my current home... The house we love is in an amazing, thriving neighborhood, but is the first house in on a semi-busy road. The home has already dropped $25k in price and the realtor is confident they'll take another $25g off after being on the market for 83 days and are motivated to move. This would be a buy and hold for us as a place to raise a family, close to shops, A+ schools, its 2000sq ft under air, and only really needs a roof within the next 5 years. Its big, well kept, granite counters, large lot, room for a pool...
Just aren't sure if it's a smart buy even with the instant equity because it has been difficult to sell and IS on a fairly busy street. It was appraised at $250k which is their current asking price, but again, the realtor is confident it will sell for $225-$230k.
Sounds like a really nice place...I have some of experience in SW florida so i find typically with the description of the house you are giving that those homes usually have a monthly fee (HOA fee) or a community fee....If this is true you want to find out exactly how much it is and then you want to ask for the last 2 years papers/books to see whether its profitable or not....if not then that will certainly be your main concern and is surely the reason why the house is able to drop another 25g and is still on the market and hasnt been sold and i would think it can even drop 30 or 40gs....if on the other hand its profitable then at the 225 mark then its a great deal (from the outside without looking at numbers) and in a year or 2 or 5 i think you can make some nice money from it.
Sorry, but there isn't any instant equity, the property has been exposed to the market and it is "worth" what it sells for. You must have heard about guru accounting, it doesn't work that way. Sale price or appraised value, which ever is less, is the value of an asset within that marketing time period, after a year it will be the appraised value.
Investors like to talk about Enron Accounting!
But, it may well be a great deal for you as your home, that matters even more. Good luck :)
Thanks! Loved the input, I'll look into that for sure... @Bill Gulley
@Bishoy Girgis The HOA is something to look in to but its the corner lot thats causing the delay in sale. The community and house have so much charm and my parent's live in the community and have no issues with the association.
the market decides what houses are worth. Most homes if you had them appraised my 5 companies you'd get 3 very different numbers. As much as corners and main drags are a pita someone lives on every corner and most main streets in every city...
I'd run the rental calculations and see if worse case you decide to move in the future it atleast cash flows. Then offer them 175-200 and see what they come back with.
Personally, we lived on a main drag to a neighborhood and quickly got sick of the high traffic, fast traffic, and the safety for our 2 kids. We moved close by to a court instead.
@Matt Turbitt Thank you for your response. Close to a month back we offered $235k when it was listed for $259k and we were turned down. Due to the increase in time on the market the realtor feels much more confident that they will take a much lower offer at this time. My wife and I are currently trying to start a family and our kids playing in the front yard would be a definite no due to traffic. We thought about seeing if they'll install speed bumps, signs, etc. to help but would always be an issue. The house does have a large backyard (plenty of room for a pool) and plenty of space on the side of the home as well. Currently, there is one pending for @249k around the corner (much less traffic), same sq ft and amenities but doesn't have the charm that this property does, minus the traffic of course. :)