Cromwell, IN. deal or no deal?


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  • Hi Jackie and CFD members.
    I followed up on the Cromwell, IN. deal and this is what I found out. The owner paid $55K in 2007 for this house and lived in it for 4 years with his wife. They started to fix up some stuff and then bought the house on the south side of them for $1. They rented the first house to a friend who had a dog. Then over the course of 5 years the friend acquired a girlfriend and 2 more dogs. Dogs peed on the carpets, destroyed the baseboard heaters and other things. The tenants called them over and told them there was a plumbing problem because the wife fell through the bathroom floor. The tenant had originally told them he could finish up the repairs. He never did. the tenants had a baby and moved out because they needed more room. The new tenant have only been there 4 months. They are paying a rent of $500.00/ mo.. The loan payment the owners are paying with PITI and flood insurance is $499.82. Not a lot of room for a master lease there. According to the owner they owe $39,500.00 on this house. The owner’s wife thinks the repairs would cost 3-5 K. I would go 5-10K. Officially this is a 1 bed/ 1 bath house. They added on a second bedroom but there are no windows in it so they can not call it a bedroom. The house needs 3 new windows and the bathroom needs to be finished. Flooring needs to be replaced at the back entry and lots of their repairs won’t meet any codes. Now the fun part- the lot south of this house was sold at a tax sale in 2015 and they got that lot with a house in disaster shape for $1700.00. He is going to throw that it with the deal. That house has no floor and has been gutted. The owners are moving about 15 miles away to a house and 12 acres they inherited from her dad after he died last year. They just sold the house they were living in and were moving stuff today when I got there. The houses are on the south side of an 88 acre lake, in a small subdivision. Zillow has most of the houses in that subdivision valued at 20k-75K. It values both of the houses at 66K each. The assessor has them each valued at about 44K. The lots are about .12 of an acre and each lot has pier access to the lake. That means you can build a pier on the lake. These houses are 1 hour and 45 minutes from my house, so I don’t know any contractors, or wholesalers in the area. Taxes are $745 for the first house and $482 for the one with no floor. Any creative ideas out there to make this a deal I can profit from? I would not try to sell this house without doing the repairs first. It would not make a good impression.
    Terry Bailey

    HI Terry

    Sounds like you hit the mother load! Don’t be surprised if other owners in the neighborhood offer you “deals” too.

    You should not do any repairs.

    Does the tenant have a lease? Is it month to month or long term?
    perhaps the tenants could get $5k from family for a down payment then you could sell to them with seller financing. You won’t get any cash flow but $5k now and a balloon for 2-3 years for an additional $10k would work.

    Advertise the other lot and shell of a house on craigslist for sale with seller financing $2,000 down payments of $150-$200 a month – you’ll have buyers come out of the wood work especially if they can park a motor home on the property while they do repairs.

    Unless you can get at least 4 times your investment back with repairs, it never makes sense to do repairs — especially long distance.
    Better to sell AS IS

    Terry,
    Somehow if you want to pursue this deal you have to get a better handle on the values of the properties. Maybe contact a realtor and see if they can give you an idea. I got a felling this is a walk away and find the next deal.

    Thanks for your comments Jackie and Don.

    I really think the house is worth about 55k, but I intend to find out what the owners sold their other house for. The tenants wanted to buy but could not get financing. and that was at $39,500. The family was homeless 5 months ago and the father works at the same Pizza Hut he did when he was 16. The houses were built in 1940. It is a very rural area with a lot of small lakes. The owners hate being landlords and need money to pay off some medical and funeral expenses. Since they are in the process of moving, I told them I would let them know my decision by Thursday night.
    Terry

    I tend to agree with both Terry and Don. This sounds like allot of work and your 1 1/2 hours away. TLC “AS IS” ad on CL could get you something or nothing with an option on the property. Could you be the only interested buyer in this deal? If so try and do what Jackie suggested or “NEXT”.

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