Hi all, hope you are all doing well!
I'll keep this short and I'll give a quick overview of a lot of the calls I have recently been getting from my direct mail campaign.
-Very motivated Sellers. Willing to give up the property for as little as just the back taxes owed with a few extra grand to walk away with (for our purposes lets say $5k)
-Property is generally a 3bed 1 bath or 2 bed 1 bath, usually 1 story and around 1000 sf
-Property has sat vacant and has utilities more or less completely stripped... therefore lots of rehab work would be needed (probably $20k minimum rehab costs)
-Average ARV in the area could generously be placed at $30K
In my mind the only investor that would even be remotely interested in a property like this would be someone looking for a buy and hold, as it seems there is absolutely no room for a fix and flip margin. My question to all of you is, are my thoughts on this correct or not?
I suppose I could get the property under contract with a financing contingency, and shop it around to see if there is any local investor interest. Any thoughts on this?! Thanks in advance for any input!
@Ardie Mansouri If $30K is a generous ARV, then $25K is more likely. The only buyer I could imagine is a do-it-yourself buyer. Maybe they could fix it up for $10K in materials. It is worth a minimal amount of effort to market.
What would it rent for?
@Ardie Mansouri There is another thread entitled something like: How do I un-own my (Camden) Property? - where the owner will PAY someone to take the ownership off him - because even the City won't take it off him - or even threaten him with WANTED foreclosure. Talk about a motivated "Seller"! Why don't you "buy" that one instead? (I am not serious about that; but this IS a serious issue in so many "F" neighborhoods). A shame.
Your thoughts seem quite spot on regarding who might take on such a project ie. NOT a deal for a Wholesaler or a Flipper. Cheers...
Updated about 3 years ago
And, you never mentioned how much the back-Taxes were? I just read another thread where over $40k was owed. And, the owner who wishes to un-own his, is being chased for something like $75k...
I'm guessing that you have no clue how much the rehab would cost since you guessed. My suggestion is to get the properties under contract and have a GC give you a more accurate estimate for the repairs, then run your numbers. Be upfront with the seller and tell them you will try, but depending on the numbers you might not be able to help. If they ARV is 30k, repairs 20k, 5k for the seller, that only leaves 5k of room for your profit and zero room for the investor. 30k ARV is probably in a war zone or something, so that means less rent. Give it a shot but don't put too much money or time into marketing, unless the repairs are cheaper than you've estimated.
@Ardie Mansouri what are some 'junk' houses selling for and listed for in the neighborhood? If houses are selling for $10K, and you can buy for $5K, there's obviously room to make money. Make sure they're selling quick so you're not stuck with it.
You'd be surprised at how cheaply you can get something ready to rent, if it's not absolutely falling down.
@Larry T. . A very good point... rehabbers don't necessarily need to be who I market too.
@Charlie Miller r It would be right around $500/month
@Brent Coombs Back taxes are only about $1500, but the seller is ready to get rid of it. I appreciate your insights!
@Chaz Reid Yeah I don't have any exact figures on rehab costs, I was more just wondering about the hypothetical situation on what a wholesaler might be able to do with a property that basically has no margin. Like you said though, worth a try... but not a whole lot of effort. Thanks for the input!
@Mark Gallagher You bring up a good point, as this doesn't have to be a wholesale deal. First thing that comes to mind is buying it outright, paying backtaxes, and maybe trying to get a seller financing deal with a potential owner. That really isn't the path that I'm hoping to go down at this point. Thanks for replying!
Join the Largest Real Estate Investing Community
Basic membership is free, forever.