OfflineI found a home that is a new build in an up-and-coming area in my city. The home needs $40,000 to complete construction. Everything is basically done, it's mostly cosmetic work. It has passed plumbing and electrical inspections.
Anyway, I can buy the property for $149k. The builder has run out of money and just wants to cut his losses. I have looked at comps and similar properties are running for $260-$290k in the area. It is a 4BD and a similar 4BD with the same square footage is listed at $335.
Should I get this under contract or will most investors shy away from this deal. Probably 4-8 weeks to complete construction.
As an aside, he has had the property listed for 3 days at $160k with his buddy who is a real estate agent...
Any and all advice would be appreciated.
Thanks!
I'm new to this but I strikes me as an Assignment where the $40,000 left on construction is no different than "rehab costs" and investor might be looking at for a property gotten at a discount which he would rehab and then sell. Any other ideas out there?
JER 29:11 Thoughts of Hope; thoughts of a blessed Future
You say that it's mostly cosmetic work right? Would that be work that you could do yourself? If so that would be a huge deal for you. If you can't do the work you could always try to put it in contract and try and find a buyer. You won't lose much if you can't find a buyer. If it is a nice place and in a nice neighborhood, I'm sure you could easily find a buyer.
Kai
Money won't fall into your hands, you have to earn it!
I don't think the numbers are there for a wholesale deal. Based on comps the property ARV would be around $275. If property was purchased for $149 and cost to complete is $40K, then those costs would total $189K. That would be 69% of ARV. You still have holding costs and closing costs on purchase. I don't think you would find an investor who would buy this, and there is too much cost to complete construction for a retail buyer.
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw
Agreed.. Made offer $130k
That sounds better, let us know how it turns out
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw