Is this a deal?

Question

3-2 with 1432sqft located in west palm beach. fl

price is 50k

house needs VERY little work the inside is all new and just needs some appliances and cleaning. Outside needs very little as well I might not even need to paint it.

I think it should rent for $1000/mo and that's what I'm planning to do with it.

Is this a deal?

Eddie Ziv · Answer

I'm with Norm.
My wife has some of friends in WPB ( she is originally from Jamaica) and is trying to push me to buy property there. I never went there myself but I checked the MLS and used Google Maps /streets and it seems to me that the directions of many neighbourhood are not good. The numbers seems to work, but if in five years, you find yourself unable to rent it out for more then $750, you could be in trouble. I wouldn't say don't do it, but go there, check the neighborhood and the street in particular. 
Go there around 6-7pm and see people coming from work. What do they drive? Do they ware any uniforms (Nurses, police officers, maintenance, etc) it can tell you a lot about the type of people who live there, they work stability and level of pay.

Good luck

Norm Chrostowski · Answer

Also the "I think" it should rent for x amount. I would try to make sure I can get $1000. One thing everyone preaches around here is never assume. Do your due diligence, make sure.

Also a 3/2 anywhere in FLA. for 50k seems  cheap to me? I just got back from that area a month or so ago. We did a lot of driving around, and I was very disappointed. There are a lot of "not so good areas" around there. Just make sure it's not a war zone, we drove through many while we were there. You don't want to get stuck with "undesireables" in your place. I always thought of W. Palm as a decent area. That has changed. I spend a lot of time in FLA. Mainly Ft. Lauderdale, and the Orlando/Kississmee area. I won't be visiting W. Palm again anytime soon.

I'm not trying to discouage you. I hope this deal works out. I'm just saying be very careful where you buy down there.

Just my 2 cents,

Norm

Norm Chrostowski · Answer

Not sure if you live in that area, if you do, I would definitely go there are get a peak. You have to know the area and what kind of people live there.

Additionally, if it's near or in the areas I looked at, I would be doubtful/skeptical if anyone could afford $1000 a month rent. That's a lot of money for someone working a low paying job, or even section 8. The areas I went through, I would guess there's not a lot of police officers or nurses living there.

My property is in a low income area, and I personally don't live there, but I would not hesitate to walk to the store at night. Also, my rent is only $550/month. But also an entirely different area.

What through up a red flag for me was the price. A 3/2 anywhere in FLA for 50k is hard to find. Unless it's in a "not so good area", and someone is trying to dump it. There's a reason it's SO cheap. She mentioned it was in good shape, so the "extensive rehab theory" is out.

Just my thoughts. I'm not saying it not a good deal in a good area. I'm just saying it something to think about, and be careful.

Eddie Ziv · Answer

This house's total value in 2008 on the property appraisers website was over $150k does that mean anything?
_____________________________________________________
Not anymore. You need to get comps of the last three months. 2008 was even bigger turnaround year then 2007.
Florida in particular is hard to get property evaluated properly because the market fluctuate so much. 
Now, I'm not trying to discourage you but you must do your due diligence and get as much information on the area you're planning to buy in before you do. I cannot tell you if this is a good deal or a bad one since I didn't survey the area and I don't know much about it. But to give an example, the house I'm in process of buying is located in an area where there are houses for sale with the price range between $10K -$85K  all within Â¼ of a mile. So go figure...

Lindsay C. · Answer

This house's total value in 2008 on the property appraisers website was over $150k does that mean anything?

The neighborhood is not one I would live in but I wouldn't call it a war zone or anything. It's not full or nurses and police officers I can tell you that.

Doug P. · Answer

Yea a lot of neighborhoods in WPB I wouldn't live in or really feel that comfortable visiting at night but isn't that expected? Aren't most of the neighborhoods you guys have your rentals in lower income and not really the best neighborhoods? I see people talking about section 8 all the time on here and I'm assuming those people on section 8 aren't nurses/police officers

Jon Holdman · Answer

Yes, its a good deal.  
          
          I'll assume $5K for fixup assuming it needs some paint, flooring, and appliances.
          
          Rent: $1000
          Expense: $500 (50% rule)
          NOI: $500
          Payment: $366 ($55K, 7%, 30 years)
          Cash flow: $134
          
          The expenses may be a bit low thanks to your higher taxes and insurance costs in FL.  Still looks like a good deal.
          
          I assume you've verified you can get tenants.
          
          I assume you've verified the fixed up value is somewhat higher than $50K.  If $50K is the going retail price for such a property, this price is too high.  You would want to be below $35K, less fix up costs.

Norm Chrostowski · Answer

Sorry, one more thing. If I had to worry about going there at night, I wouldn't buy there. I have those areas where I live, and I will not buy there, it's not worth the hassle/risk.

Eddie Ziv · Answer

Yes, but I don't pay that kind of money for my properties. I'm finalizing a deal right now for a 3/1 SFR in Birmingham, that cost me $12,000. It's a cash deal and I expect to put $3K for quick rehab and rent it for $600-650. That's a whole different ball game.

Is this a deal?

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