What am I not seeing

Question

Hi,

I am very new to the boards, having been reading up on real estate and watching prices in my area for awhile but have not made a move yet. I live in a rather hot real estate market so I keep an eye on some of the smaller towns near by. I found one multi-family property that is a bit unique but pasts the initial eye test. Not sure why this one is hanging around more. It is a more unusual property but apparently the main house rents for $1000 and the small one $595. What concerns would a more experience person see with this setup?

http://www.realtor.com/realestateandhomes-detail/808-Jefferson-St_Sauk-City_WI_53583_M85549-10479?ex=WI618414095#photo12

Jason Chen · Answer

I scrutinized the photos and this deal.

The photos look ok. I don't see a roof that needs repair or anything.

The problem with this deal is just one thing - the PRICE. It needs to be purchased for about $75,000 or less in order for it to be a good deal. I'm pretty sure the owner is either retarded or delusional as he is listing it for $175,000

Sauk City has a population of 3,500. Just LOL @ paying $175,000 for a 4/2 old, non-new house in a city with a population of 3,500. You could pretty much almost construct a BRAND new house for that much that is above and beyond that property on an empty adjacent lot.

Ryan Sharpee · Answer

Thanks for the info and your assessment.

Michael Henry · Answer

@Ryan Sharpee I just checked and the house is under contract. Someone thought it was a good deal. Every deal that you do will not be a home run. From what I read above it seems like the price is about right based on the location. I think the rents had some upside based on the condition of the house; there were more photos on MLS, closer to an extra $250.

The last thing is that you can't be afraid to of write offers at the price you think makes sense based on the numbers you need to have. This does not mean writing a lot of lowball offers and seeing what will stick.

Ryan Sharpee · Answer

Thanks for the feedback. While a small city, it is only 30 minutes from the capital of WI so it is becoming a very popular suburb. Very new to all this so thanks again.

Ryan Sharpee · Answer

Thanks for the feedback. While a small city, it is only 30 minutes from the capital of WI so it is becoming a very popular suburb. Very new to all this so thanks again.

Jason Chen · Answer

05/17/2005   Sold   $129,500   —

Also saw on the price history that he paid only $129,000 for it at pretty much the peak of the huge housing bubble back in 2005/2006. This is a classic case of "i suffered a huge loss because i made a bad purchase, and im going to offload it to someone else now, but first lemme see if i can turn a profit"

Comparable properties in the area are selling at a way cheaper dollar per square footage as well. I'd run away from this one if i were you.

What am I not seeing

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