This Deal seems to Good to be True..

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This Deal seems to Good to be True..

Corey C.
Member since 2018 · 29 posts · 7 votes

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*This link comes directly from our calculators, based on information input by the member who posted.

I have a much more detailed spreadshseet analysis and CMA of this property to provide more context. The listing price is actually $99,900 and the CMA I did puts it at $223,908. Keep in mind no value adjustments were made so I don't know how much that throws off the estimate. Most of the repairs have been either finished or started. Most of the supplies to finish the rehab/repairs are at the property just waiting to be picked up and started again. The seller is listing "as-is" cash only and wants accompanied showings with a proof of funds before he shows it. 


This would be my first property investment so I want to make sure it's the right move. I'm stuck in the analysis paralysis phase right now and need to get out!  

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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
7y
I looked at an uncompleted rehab last week. It was a mess. Had a stop work order pasted on the door and most of what I could see was substandard. On partial rehabs, the seller often feels like they've added value but often that isn't the case.
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  • Eddie Egelston
    Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
    7y

    No CMA ends with the house being worth $xxx,xx and 8 dollars. So what did you actually do? Use some BS push-button AVM? "No value adjustments"? So basically you didn't do a CMA. You *perhaps* gathered comps.

    I'm always leary of rehab estimates that are so round. $20,000 eh? Hopefully that's material and labor, or else that explains a lot of the "deal" right there.

    Not trying to sound mean, just realistic. I can vouch for the idea that a 90% complete project carries very little value on the open market. People either want turn-key or fixers. Not a lot of room in between, so you may have something here.

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    7y
    I looked at an uncompleted rehab last week. It was a mess. Had a stop work order pasted on the door and most of what I could see was substandard. On partial rehabs, the seller often feels like they've added value but often that isn't the case.
    1Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Eddie Egelston

    Wife is a realtor. I used the CMA tool on the MLS, like I said I'm new. I tried to figure out the value adjustments but it's confusing and I'm not an appraiser. I did my best with what I had and what I've learned. I appreciate your feedback but it seems you just couldn't wait to tear this apart. I also mentioned I have a more detailed analysis that factors in the other costs in more detail but you rushed through my post in a hurry to **** on it. I also have residential construction experience and have a good idea about what repairs cost. I thought BiggerPockets was a positive community with professionals who provided constructive feedback, I must be mistaken. Thanks again.

    4Reply
  • Account Closed
    Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
    7y

    The house does not look like it is in a heavily populated area. It looks like it is in a rural neighborhood. It is hard to tell how much work the house needs. When asking for the top of the market price buyers want a house in pristine condition and I can't imagine $20k doing very much with a house this style and this old. I will bet there is a reason the seller is dumping this particular house. Maybe, it has some sort of expensive problem i.e. foundation, furnace, dry rot, roof, electrical, or will just cost too much to make in pristine condition.

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  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @John Teachout

    Thanks for the response. That’s what I’m worried about. The fact the seller wants to do as is cash only leads me to believe there may be more rehab than I can see from the photos or what’s in the listing description.

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Jack Orthman

    You may be right. Seller won’t let me look without proof of funds, but I’d at least like to just get a contractor in there first to get an estimate at least.

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  • Account Closed
    Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
    7y

    Incidentally, people keep saying they have analysis paralysis. That is actually a very good problem to have because that means you have not found the right deal and/or you are not educated  or experienced enough about looking at properties and crunching numbers.. I look at hundreds of properties and sometimes won't buy a property for several years, but when I do find a property I know for a fact that I have found what will be a goldmine. I don't need to ask anyone. I don't even discuss properties with my wife when I buy. When you find the perfect deal you should have no doubts and you should not have to ask anyone if it is a good deal. You will know. Or... when you have to ask someone else or have any doubts then don't buy.

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Jack Orthman

    You’re right I don’t have the experience yet but I have to start somewhere or At least get in the practice of analyzing deals more and gain that experience. I posted here because guys like you have that experience and I’m looking for that constructive feedback. BP podcasts always talk about just going out and doing it, pulling the trigger. Just making sure my sight picture is aligned before I pull the trigger. (Military reference for you vets)

    0Reply
  • Eddie Egelston
    Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
    7y
    Originally posted by @Corey C.:

    @Eddie Egelston

    Wife is a realtor. I used the CMA tool on the MLS, like I said I'm new. I tried to figure out the value adjustments but it's confusing and I'm not an appraiser. I did my best with what I had and what I've learned. I appreciate your feedback but it seems you just couldn't wait to tear this apart. I also mentioned I have a more detailed analysis that factors in the other costs in more detail but you rushed through my post in a hurry to **** on it. I also have residential construction experience and have a good idea about what repairs cost. I thought BiggerPockets was a positive community with professionals who provided constructive feedback, I must be mistaken. Thanks again.

     LOL! I didn't "rush" to tear this apart. I search forums for "unanswered" posts and try to help people who are not getting answers. Yours was 2 hours old with no replies.

    I went out of my way to say I wasn't trying to be mean- knowing that tone etc does not come through on screen.

    You ask for feedback you got feedback. And it seems I guessed correctly that a CMA was not done, but rather a "CMA tool" was used. You won't need to hear from me those things are often trash.

    Also I did not disregard the entire post; I acknowledged you may have found a deal. You will be well served to run a proper CMA to know more about it.

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  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Eddie Egelston

    Ok if you're telling me the CMA software on the actual MLS is trash, what do you suggest I use? I'm not a realtor, investor (yet) or appraiser so I don't know the difference. I could've just wondered instead of taking some sort of action. I thought that was better than using Zillow comps.🤷🏻‍♂️ I tried learning the value adjustments but it doesn't seem like common knowledge.

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Eddie Egelston

    Also how would you suggest I approach the forum again with a similar post or another deal next time? Don't say CMA? More details and numbers? What do

    you like to see?

    0Reply
  • Glidden Rivera
    Rental Property Investor · Orlando, FL · Member since 2019 · 105 posts · 71 votes
    7y

    @Corey C.

    Best and most efficient way to check value is competitive sales in the area.

    0Reply
  • Account Closed
    Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
    7y

    Do you have any more pictures of the property and the neighborhood?

    When buying a property, I like to look at the prices of similar properties that are for sale and not properties that are already sold. Then, I do my adjustments to buy at the best price.

    All the successful flippers I know write hundreds of offers and low-ball every offer. Eventually, they get really lucky. The worse that can happen is the seller says, "no"!

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Jack Orthman

    I do have more pictures. I used 5 active properties and 7 closed properties in my analysis. Again the value adjustments is something I’ll have to learn.

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Glidden Rivera

    Thanks. So you’re saying I should focus my analysis more towards the active listings in the area as opposed to what has already sold.

    0Reply
  • Glidden Rivera
    Rental Property Investor · Orlando, FL · Member since 2019 · 105 posts · 71 votes
    7y

    You need to do both. If it’s listed, find the average listing price for Like  kind and quality. Then do the same for sold property. You will learn two things, what it can be listed for and second what it sold for. Be conservative.

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    @Corey C., is this going to be a buy/hold or are you trying to flip it? In my opinion, the end use makes a difference in how to analyze the property. We buy/hold so I'm looking at what the investment in the property will be vs the rental price. Not really concerned about the market price.

    0Reply
  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @John Teachout

    The plan is for it to be a flip. I’m not opposed to buy n hold option either.

    0Reply
  • Eddie Egelston
    Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
    7y
    Originally posted by @Corey C.:

    @Eddie Egelston

    Also how would you suggest I approach the forum again with a similar post or another deal next time? Don't say CMA? More details and numbers? What do

    you like to see?

    Well if the wife is a Realtor, she should only need about 5 minutes to pull comps and make educated adjustments. At least enough to know if you should go into the trouble of evaluating further and going to see it. Hopefully subject property is not in a low density area and too different from others. That adds ambiguity.

    I don't know any investor that would base their rehab estimate off of MLS pics. You must walk the property first. So in that way, the post was made too early.

    If you have rehab knowledge and she's a Realtor you're the perfect team!

    Best deal I ever saw on MLS was an almost complete house. House needed about $20k to finish. The folks that bought it must have cleared $60k profit for a few weeks of work. Risky thing about, it was owned by a druglord who had the house taken away from him through 'forfeiture'. I would have been afraid who might have come back to the property :/

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    7y

    @Corey C., I would not use listed-but-not-sold properties in my CMA. You can list at literally any price you want. I'd only use sold properties.

    That said, Do you have the funds to pay cash? If not, how are you going to purchase this house? If so, provide the proof of funds and go take a look at the property. 

    [email protected]Podcast Guest on Show #261
    BiggerPockets
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  • Corey C.
    OP
    Member since 2018 · 29 posts · 7 votes
    7y

    @Mindy Jensen

    Hi Mindy,

    I do not have the cash for the purchase. I was thinking hard money. I have some decent equity in my home too so I was going to possibly tap into that.

    I was under the the impression it was better to have a combination of active and sold, good to know. Thank you!

    1Reply
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