Baton Rouge Deal...is This Realistic??
I went out and looked at some foreclosures that I received from a RE agent friend. I found a house that was listed at $99,600 in January. Now it is down to $74,000.
Here's the deal: House built in 1985. Owner had Cuban tenants who bred Collies. They were evicted and when they left they took as much as they could including the stove. They left some holes in the ceiling where the light fixtures were (by holes I mean fist-sized holes completely through the drywall) All the carpet will need to be replaced. there is a pool but the lining has peeled from the sides. The biggest problem...a cracked foundation due to a pipe leak under it. With the exception of the foundation problem I estimate between $12K-15K in repairs and cosmetic updating. This house is BY FAR the ugliest in the neighborhood. I went to the neighbors and asked him about the area and he likes it. He bought his house for $106,500 3 years ago. There are 6 houses in the entire sub-division that are for sale with 2 of them having "Sale Pending" on the signs.
Here is my thought process:
If the ask price is at $74,000 with a foundation problem, I take pics of all the damage and get a quote from a contractor and an inspector as to what the extent of foundation damage there is. So, 74K - 20K (estimate for foundation repair) =54K
54K-15K (repairs and cosmetic updating) = 39K
OFFER PRICE $39,000
With a possible profit of 25-30K, I would let the sales and holding costs get absorbed from that profit so as not to lowball too much. Essentially, I offer 39 or 40K do the repairs and updating and either flip it at a price of $102,000 to $109,000 or keep it as a rental home.
What do you think??
Thanks for any input!!
Chris
I think I would follow the Cubans and the Collies and run llike hell from this one. There's got to be an easier deal out there.
What is the after repair value of the house?
Get a plumber, general contractor, or a structural engineer in there it estimate the "foundation problems"
Brenda
ARV is in the $102,000 to $109,000 range.
I will certainly get the aforementioned people involved, but i am curious if this constitutes a "too risky" situation.
What range (pricewise) do foundation problems fall in? I figure if we can repair it for $20K or less than everything else falls into place. Am I right?
Chris
nothing is too risky if you know what you are doing (or in your case, if you get iron clad absolute maximum costs for what needs to be done.
If it is as absolutely bad as you report, you should be able to get a very short sale - get your estimates together and present your offer.