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Patrick,
Did you listen to Pete Fortunato’s lesson in the learning annex? I doubt the cash she gets from the sale will be around a year from now. Find out her true motivation for selling. “I just want the cash” is a preprogrammed answer similar to that which we give to people in department stores: “Oh, I’m just looking”.Maybe she needs some cash, but I doubt she needs it all.
If you can wholesale the house to someone for a little more than $35,000 – then that is a good indication that the price is too high. . . . even IF there are newer homes just behind it that sold 3 years ago for $120,000
Without knowing the market, it is hard to make a judgement call one way or the other. But if it were a great deal, you would have other investors fighting to buy it from you. Since they are not, it says a whole lot.
Be careful.
Jackie
I just placed an Option to Purchase on a 959 sq.ft, concrete block construction house, 67 years old, 2/1, living room, kitchen. I have an option at $35,000. There is an entire street of newer homes (2004 built) with approx. 1100 sq.ft. which sold in the $110-$125 range in 2004/2005 right behind this house (this one sits on a main road)and a few rehabbed properties within a half mile.
The house needs gutted and rehabbed (being lived in by an elderly lady who has not kept it up and wants to move to the “high rises”).
I have advertised and called all my buyers but thus far none want it.
I have been thinking of using some PI money to purchase and fix up (approx $15,000 to do so), then try to sell with seller financing or keep as a rental.
I am not too sure about the concrete block construt of the house…not structually, but what the true comp would be once fixed up in a neighborhood of sided and bricked houses.
Anyone dealt with this type issue?
Any suggestions?
Patrick,
Those newer homes which sold for $110k in 04 & 05 don’t have anything to do with this property that is 67 years old. You can’t use those as comps.
You need to find comps that are comparable.
It has been my experience that the biggest mistake you can make is buy something that you can’t sell. Especiallly if it requires getting a loan – even if it is private money.
If the seller will give you favorable terms with seller financing, then you can sell with a seller financing wrap. That is the only way I would do this deal. If it is on a main road, there’s a chance it could go commercial later. But there’s also a chance the city could condemn the whole street to build newer homes.
If I could not get 100% seller financing with really favorable terms, if it were me, I would walk from this deal.
Jackie
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