Buying Rehabbed Properties
I was offered (missed the deal, sold to his brother) but it got me thinking.
This guy was rehabbing 2 and 3 flats on southside of Chicago.
Renting them to Sec. 8 (huge Cashflow) Tenents already in.
Then selling to investors.
How do you evaluate these type of properties?
* Work done that they said was...they said it was completely gutted and everything new installed. (I saw the furnace,waterheater, and Kitchen plumbing....looked new to me)
*Actual value of the house? Being recently rehabbed, there isn't much in the neighborhood for comps.
* What other pitfalls come into play? I was trying to do my due diligence and not miss anything and he went elsewhere.
(rental properties in general)
Who much info can you request (and should get) in a property. example...maintence records (being rehabbed is N/A right?), expenses, income....and how can you be sure its not doctored?
Thanks for you help.
Well, I evaluate the property using my best judgement, then look at the monthly income versus the purchase price. What were they?
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Most of this post was for future information so I know what to ask for and rightfully get.
The deal was. 200K for a 2flat.
5 bd....rented for $1500.00 (didn't see any paperwork to verify)
4 bd....rented for $1250.00 (same)
Even with Conventional Financing:
200K
20% down
160K @ 7% (used to make sure not to short myself)
Payment of $1065 P/I
So that would leave $1685.00 left for Insurance/Taxes (of 1,200/yr)/ other expenses.
Its the "other" that slowed me down, to the point where I lost the deal. Granted he gave me very little time...but.
5 bd....rented for $1500.00 (didn't see any paperwork to verify)
4 bd....rented for $1250.00 (same)
for 200k, I would buy it.
On these types of things, you grab onto the seller and go to the property. Have him show you leases and if not go and talk with the tenants with him or with his permission. These deals go fast if those are real numbers.
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