I found out the owner of the house next to mine is interested in selling and I would like to acquire the property as a buy and hold investment. The house is off market and has been sitting vacant for 5 years. It is in ok condition but was not winterized property and I know that the water line is broken in at least one spot, a hot water boiler line has freeze damage in at least one spot, and some squirrels have made it inside at some point during the vacancy so who knows what damage they did. Bottom line is I am a beginner investor and do not feel comfortable taking on the risk of buying it and fixing it up myself but I would still like to find a way to make some money on the opportunity. My thinking is that maybe I can wholesale the deal to a flipper with some sort of first option to buy from them when they sell the property.
Has anyone ever done something like this? Or does anyone have any other creative ideas of how I can capitalize on the opportunity?
Get a home inspection and bring in a contractor for bids
Buying a flipped property is going to be a retail price. What would be the point of that? Buy the house cheap and pay someone to fix it up if you want to rent it out. In most cases, a house purchased at retail doesn't cash flow well as a rental. You need to add value.
I should add that as a neighbor to the house, you could probably do a lot of the work yourself. Even if you don't have handyman skills, much of renovating a property is grunt work like washing walls and floors, painting, cleaning windows, caulking, scrubbing grime off tubs and sinks, polishing faucets, and so forth. You could hire a plumber to fix the leaks and it may only cost a couple hundred bucks. Get an experienced person to go through the house and once you know what it'll cost to straighten it out, go from there. Sounds like it may be a good opportunity.
@John Teachout I suppose my thinking is that the assignment fee from wholesaling to a flipper would offset the retail price enough to make it a decent deal. I was also thinking the flipper may be willing to sell a bit cheaper if we did not use a realtor.
I'm not completely opposed to the idea of buying it myself. The fact that it has been vacant for 5 years combined with the fact that I'm pretty inexperienced make me shy away from it though.
That's why you take a pro through the house so they can assess it.
@John Teachout I am very much willing to put in whatever work I am able to do myself to get the place renovated. My fear is underestimating rehab costs and overestimating arv. I suppose if I get some solid estimates from experienced contractors and get some second opinions on arv it shouldn't be too scary.
The ARV could be provided by a realtor familiar with the local area. Since they wouldn't be involved in the transaction, you may want to throw them a bone. What's your guess as to what you could get the property for vs the ARV. If you think it was something that could be wholesaled, that's typically a sizable spread.
I'm thinking ARV would be around 80-90k and I'm thinking I can get it for 20-30K.
Do I actually agree with @John Thedford ?
What you're suggesting is effectively having the rehabber/flipper rehab the property for you. Getting him to buy it and then sell it back to you is probably going to cost you more than just getting someone to do the work for you. Your rehabber might even be willing to do the work for you without having to tie up his money in the purchase.
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