All Forum Posts by: Erik Heger

Quote from @Account Closed:

Hey there! It sounds like you're in a bit of a tricky situation with your friend's house. Buying it could be a good investment, especially if you're willing to put in the work to fix it up or rent it out. Just make sure you do your research and understand all the costs involved, including renovations and potential rental income. 

It's important to consider your own financial situation and whether you're ready for the commitment of owning an investment property. Maybe talk to a real estate agent or financial advisor to get some more specific advice tailored to your situation.

Thanks, Mitchell.  Sound advice as well.  Yes, one of my biggest concerns and unknowns is how much a gut renovation would cost since I don’t have that experience.  I guess it makes sense to try to connect with a local contractor to get an idea as well as a realtor about potential rental income.  Thank you! 

Thanks for the replies and guidance.  I really appreciate it.  The only other thing I probably should have originally added (if it changes anyone’s thoughts) is that the property is next door to another house that is connected by a wall. That house was recently purchased by an investor who expressed interest in buying this house. I know it is valuable to that investor because then he would be able to knock down both if he wanted to and put up a multi family unit. On the other side of the house is a set of four garages that someone else owns and rents them out. Being in an up and coming neighborhood, I feel like that is a prime location for a developer to look to purchase (the houses and the garages, which my house would be right in the middle of) to put up a multi unit dwelling. So I guess part of my thought was that if I purchased the house now, I could potentially try to sell it for more later since it wouldn’t be a “forced” estate sale and be more valuable to a larger investor.  Not sure if I am thinking about that correctly, but that was part of my thinking.

Quote from @Kevin S.:

Quote from @Erik Heger:

Hi,

I am not a real estate investor and the extent of my real estate experience is owning my own primary residence for which I have a mortgage.  I have a unique situation where a long time family friend inherited a single family house in Jersey City from her deceased mother.  She herself is now in a nursing home and will not be living in the house.  The house is going to be sold as part of settling the estate with the proceeds going to the nursing home to pay for her care.  The house would have gone to me when she passed away as she had no other relatives.  My primary concern is for her care, but she is upset that now the proceeds from her mother’s house will go to the nursing home without me getting anything.  One option I am trying to decide on is whether or not I should purchase the house myself as an investment property with the intention of either renting it out or fixing it up and selling it.  It is a single family home and sits on an irregular sized lot so I don’t believe it can be knocked down and rebuilt, but would definitely need to be renovated.  Also maybe turning it into a two family home to maximize rental income is an idea.  Just wondering since I am new to this if I would be taking on more than I can chew and what the process/options might look like.  Obviously my own financial situation/financing would be a big factor, but mainly looking for some perspective in terms of real estate opportunity here.  Any thoughts are appreciated!  Thank you.  

 If the proceeds from the sale has to go towards her nursing home expense, like Bill said, it has to be sold at market price.  In that case this home is just another home on the market.  Would you buy it if it was just another home on the market at the price it is supposed to be?

Thanks, Kevin.  Appreciate your response and I see what you and Steve are saying.  To reiterate, I likely would not be considering buying this property in any other situation.

Quote from @Steve Vaughan:

I'd probably stay out of it.  Even if you first learned enough about owning and operating a rental (out of area?) to protect yourself, this will still be under the 'arms length ' microscope. 

This should be a lesson in wealth transfer.  The informed dribble out our wealth to our children when they need it most- match earnings when they're young in a Roth, then help at major milestones up to their mid to late 30s.  

Then generation skip the houses and big stuff.  

Inheritors in their senior years are not benefitted. $5000 well placed in your 20s is worth infinitely more than anything you get when you're 70. 

Thanks, Steve.  Also good advice to consider.  Yes, I definitely wish things were handled differently ahead of time, but unfortunately they weren’t.  Hindsight always 20/20 and certainly a lesson learned! 

Quote from @Bill B.:

You’re probably going to have to pay market or at least near market prices anyway. Medicare/nursing home isn’t going to let her sell it to you for half price. So why this home over any other? It doesn’t sound like a good first deal. If you get lucky you end up ok. If you something unexpected pops up you lose money on the deal. Barring a history of renovating homes I’d pass. Pretend you didn’t know this person. Would this be a house you’d be looking at buying?

good luck. 

Hi Bill,
Thanks very much for your reply and guidance, it is much appreciated.  Yes, understood that I would have to pay fair market value for the house and an appraisal is being done for that reason (no matter who the buyer is).  To answer your question, I would not be looking to purchase this house as a real estate investment in any other situation, unless of course I was getting it for half price or something.  Since that is not the case, I see what you’re saying is that it is essentially like looking to purchase any other property at fair market value.  So definitely something to consider.

Thabks,
Erik 

Quote from @Devin De Lange:

Hi Erik, 

To kick off analyzing the potential of this deal, and whether or not it's worth investing in, I would ask you what your end goal is. Do you want to take on the large project of a flip and sell, and walk away with a lump sum of capital, or do you want to buy and hold -- putting in the needed renovations to make it renter friendly and then getting a tenant into the property to pay off the asset? In the buy and hold situation, depending on what you buy it for, the expenses of owning/taking care of it, and how much you can rent it for, you could have some cash flow each month and have a second property that appreciates each year. 

The other big factor here is -- once you make the above decision, what are my expenses likely to be? How will I finance the deal? With a hard money lender for a flip, or with a more traditional lender for an investment property. 

To summarize, I would ask yourself -- what is my end goal? How much work do I want to put into this? What financially makes this worth it? And if you can determine which strategy to go with and it makes financial sense, you go for it. 

I hope this helps!

 Hi Devin,

Thank you very much for your response and guidance.  It sounds like sound advice and a good framework to help me make a decision.  I really appreciate it.  

Thank you! 

Erik

Hi,

I am not a real estate investor and the extent of my real estate experience is owning my own primary residence for which I have a mortgage.  I have a unique situation where a long time family friend inherited a single family house in Jersey City from her deceased mother.  She herself is now in a nursing home and will not be living in the house.  The house is going to be sold as part of settling the estate with the proceeds going to the nursing home to pay for her care.  The house would have gone to me when she passed away as she had no other relatives.  My primary concern is for her care, but she is upset that now the proceeds from her mother’s house will go to the nursing home without me getting anything.  One option I am trying to decide on is whether or not I should purchase the house myself as an investment property with the intention of either renting it out or fixing it up and selling it.  It is a single family home and sits on an irregular sized lot so I don’t believe it can be knocked down and rebuilt, but would definitely need to be renovated.  Also maybe turning it into a two family home to maximize rental income is an idea.  Just wondering since I am new to this if I would be taking on more than I can chew and what the process/options might look like.  Obviously my own financial situation/financing would be a big factor, but mainly looking for some perspective in terms of real estate opportunity here.  Any thoughts are appreciated!  Thank you.  

Hello All,

Just wanted to introduce myself.  I am not a real estate investor by any means, but was referred to Bigger Pockets by a friend of mine due to an interesting real estate opportunity I may have in front of me.  The extent of my experience with real estate is owning my own home in Jersey City and obtaining a mortgage for it.  So while I am familiar with the general process for that, I am looking to learn more and get ideas about real estate investing, especially to help me with this first project I have in mind.  I look forward to learning from and connecting with many experienced folks on Bigger Pockets!  

Thank you,

Erik