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This seems like it can't be true a 2/2 with a garage. Am I doing this correctly? I put very conservative numbers. Trying to get comfortable analyzing deals. Have not seen the inside but the owners have had it since 2000 and are 62 years old so, I'm assuming upgrades have to be done.
-Comps are showing $320k ARV
-The neighborhood seems like a lot of flips/rehab and rent are happening and bringing the neighborhood up (some of the 4/2s next door are renting for $3,200 at the moment).
-$189k in equity and $150k left on loan and there is a 53k judgment lein from the 2nd mortgage they took out.
-Home is listed as a pre-forclosure from last september? So, timeline doesn't make sense.
Also, we don't have very much capital so getting the 75k cash upfront seems daunting, would wholesaling this be a better option as our first investment property? The neighborhood seems like a lot of flips/rehab and rent are happening and bringing the neighborhood up.
I appreciate any coaching anyone has to offer! :)
Updated over 2 years ago
The equity is $163k not $189k. My mistake. Thank you David for catching that!
@Maranda Nevils , something is not adding up. Is your $189k equity number correct? Adding that to the $203k in 1st and 2nd mortgage balance would give you a market value of $391, which is way above your $320k ARV. Also, what makes you think the current owners are going to walk away empty-handed, leaving all their equity on the total. Also, even for South Florida, $320k for a 2/2 seems somewhat high. Finally, I don't see any property tax expense line item. In Broward county it runs 1.19% of sale price. Did you forget to include it? What city is the property located?
@David Cruice Good catch! I mixed it with another property as I was typing! I am double checking all my numbers now-
It has $163k equity and the loan balance is $150k. Initial loan was for $158k and the HELOC was $150k in 2008.
Last few years property tax was around $1250 annual. For some reason it was grayed out on the calculator not letting me fill it in so I mentally factored it in at the end.
I calculated the $210k offer based off the balance of $150k plus the 53k lein = 203k leaving the owner with $7k so they wouldn't be walking away empty handed- again if I did the number correctly. This would be the max allowable offer assuming they have paid 0 towards the judgment lein which was filed in 2016.
I tried to do as much research as possible. The $320 is what the comps are showing which I also think is high that is why I put in $300 as the ARV- It seems other houses in the neighborhood are taking the same layout and converting to a 3rd bedroom (possibly converting the garage).
I appreciate you taking the time to look at this with me :)
@Maranda Nevils . NP. Happy to help. Let me know if I can be of further assistance. Thx
@Jason D. I think you have a great point and I am also unsure about the rent amount but here is how I got that number:
Rentometer shows $2900 average for 2br in the area. Craigslist is showing similar single family homes between 2200 and 2700 and condos between 1900 and 2300. Zillow isn't showing much other than the few 4/2 and 4/4s at about 3000 to 3200. I kind of just picked middle of the road and toying with the idea of turning the garage into a 3rd bedroom. But, I'd love to hear your opinion on that. Does getting rid of the garage to add a bedroom improve the value of a home significantly enough?
The neighborhood is on US 1 close to the historic downtown, less that a mile from the beach and less that a .5 miles from the main shopping areas (Publix, Target, Ross, Marshels ect). Do you think I am factoring in the right things?
I would love to hear more about how you would personally analyze this and if you think this is a pursuable lead?