OfflineI am talking to a lady right now who has a house that has been appraised at $103,000. It is not in a bad location and it is close to a college so I think it would be good to rent out. (3/2)
She is selling for $99,000, but says she will go as low as $89,000. So would it be something to invest in? Considering that I won't be able to market it for a huge discount from it's FMV, would it still be easy to sell in the 30 day period that we agree upon?
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The house has been completely remodeled and is very nice on the inside and the yard is big. It comes with appliances and I am thinking I may be able to talk her down to $84k or $85k, if I could have it sold within the 30 days. Zillow.com says the property is worth $112,000.
What do you guys think?
What is your exit strategy? Are you looking to hold it or are you trying to wholesale? If you are wholsaleing it you most likely would need less than 30% off so you can include your fee. Investors also deduct repairs, from that number. If you are planning on keeping it for yourself, you could probably make the numbers work if the seller is willing to give you terms on contract for deed or lease option.
You need comparables from an RE agent to really see what the house is worth. What is the current tax value also. Alot of homes in my area are not worth the tax assessed value.
Cathy B
Follow my progress at:
http://www.deangraziosi.com/real-estate-forums/investing-journals/44397/...
Zillow's tax assessment says $89k. If anything, I was hoping to buy it (it needs no repairs as it has just been remodeled) and rent it out to make the payments on it. At any point in time down the road I could sell it for my money back and still have profited from the positive income every month.
And, as I am quite new to this, could you give me a brief explanation of what you mean by if she is willing to give me terms on contract for deed or lease option?
Thank you for your reply Cathy for your reply. I have seen you answering quite a few questions around here and you are a good addition to this community. Keep it up, please! =)
Well the 1st thing that you want to do is your own due dilagence, by getting
your own comps. then since you state that there are no repairs which is another techniq for getting the price reduced. As a investor you never want to pay fmv for any property. You will not want to pay any more than 70% of the market value and if you plan to flip it ot another investor, you have to reduce the price even lower to include what you want to make off the sale from the other investor.Because 70% is the averange of what another investor is willing to pay for a property today some will only pay a lower percentage, Once you have done all these things this is the maximum allowable price you are willing to pay. And for no reason should you offer not 1 cent more if you intend to make any money off the sale.
the other things to ask the seller if they are willing to do an owner finance on the property with x amount down or a lease option. put some tenets in it and get some positive cash flow on a monthly bases. Now you have to take into
consideration that if you put college students in the property that there's always going to be repairs to be made, so if you can't do repairs yourself, you are going to have to have a mantenance man and that's an extra added expense you will incurr.
So this is something else you will have to take into consideration. As to your exit
strategy, when purchasing any property. So the answer to your question is no a house
doesn't have to be 30% off the FMV depending on your exit strategy. But if you plan to whole sale/ flip to another investor for instant cash the answer to your question is YES as explained above.