Advice/Thoughts on potential 1st deal

[Kenneth Smith]

Hello BP members,

This is my first real post here, and am looking for some thoughts/advice on a potential first deal.

I am new to the investing arena, and have been focusing on probates. I started sending out letters in Sept. 2010 and have had my share of calls but have not really had much luck. Most of it has to do with my "fear" of just getting out and making things happen. Anyways, I am confident that I can make this work, so here goes.

I went and saw a property yesterday. It is a 3/2 SFR in a resurging neighborhood here in Ft. Lauderdale. The neighborhood was built in the mid to late 70's, and now is seeing a lot of activity with rehabbers playing a big part in the resurgence. Comps in the area run anywhere from the 40's to the 80's generally. This particular property has been 95% rehabbed by the inheritor. Only minor cosmetic work on the landscaping needs to be done. I should also mention that the lot is one of the larger ones in the neighborhood. There is no debt on the property and the person is looking for approximately 68K. He owns other investment property in Ft. Lauderdale, but doesn't want to keep this. He's retired and has enough to keep busy.

I spent about an hour with him and felt very comfortable talking with him. He has two other "investors" looking at the property today and tomorrow. He said that if nothing happened, he would list it next week.

Knowing the neighborhood, I think the property could move fairly quickly. With lending standards tighter, conventional financing might take some time. I thought about the possibility of a lease option.

I would like to get some thoughts on this scenario as a starting point and then get into some specifics. Anything would be much appreciated. I'm here for the long haul and want to absorb as much as I can.

Thanks for your time!

[Stefan Forsberg]

Hi Kenneth,

Welcome to BP, lots of great people and information here.

I think your question is best answered by yourself, you say that the comps are from the 40's to the 80's, what does the 80's type properties look like? Better or similar then the one you are looking at?

If 80's is the most you can get, you are looking at over 80% of ARV if paying 68K for the property, if you add on Closing costs, landscaping, inspections, insurance, selling costs etc, I don't think you have a lot of room left for any profit.

You should first get some real comps from an agent that knows the area, then you need to factor in holding the property while finding a qualified buyer that can close, this could take up to 6 months if you are unlucky, do you have cash-reserves to support this?

It is good that you are out there doing things, it will only get easier the more you do. I would personally pass on this deal but I am also fairly new so maybe I am just waiting on this perfect deal to fall in my lap.

Good luck with your investing..

//Stefan