Does This Deal Make Sense At All??
I founfd a house in a great location for $225 ( it's been sold through a realtor), all the other homes around it go between $230-$350. I was thinking about buying it and then doing a lease to own or a RTO, the rent on a 3 bed 1 bath around here goes for $1300 p.m. would it make sense for me to go ahead and do this???? Please help me and I am so desperate to buy my first deal and I keep on reading what other people are doing but for some reason I never get the courage to do it myself. 
Don't ever get desperate, when you do, you usually end up losing money.
From the scant information you provided I don't think the numbers work. 225k for the house that you will only be able to rent for 1300? If this is the case you will be losing money from day one.
Rents should equal 1% of the purchase price, in other words, 225k home should bring in 2250/month in rents.
[addsig]
It seems as though you are buying a piece of property at or near FMV. If that is the case, where is your room for profit?
This one may be a bypass.
Try working the price down.
10% of sell price for rent is generally the norm I shoot for also.
I guess I knew when I was asking for advice that at some level this didn't sound like a good deal, meaning the LTO or RTO option because my rent wouldn't be covering the mortgage payment and you guys have reassured me on that. Thanks so much!
I guess I am bodered because I know they are good homes in great ares where homes go for more than $225 and I didn't want to pass them by, I just don't know which other way I can make money out of them
Keep searching my friend. Took me 2 years to find my first deal and then my second one took 2 months. Just be patient and be absolutely sure that you'll make money. Good luck and happy investing!
suspain, what's the FMV of the home. Just because it's being sold by a realtor doesn't always mean that theres not any equity in it. Is it the lowest priced home in the neighborhood. Why?? Maybe its undervalued. Check into it. Maybe it doesn't work as a L/O , does it work as a flip. I always run any property I'm thinking about through all the tests. Where does it fit best? If it doesn't seem to fit anywhere in your bag of tricks , then move on.
The above post from dajackhammer seems the best for this property.
Check out the property to flip rather than keep as a rental. Cosmetic fixer possibility. If there are other higher priced homes in the neighborhood for sale ... check those out to compare features to the one you are interested in.
Is the house vacant or owner occupied? What I was wondering is the house dirty, pets, old, dated stuff? A little paint, new carpet, new lino, some work in the yard, remove old curtains. Could these reasons that it has not sold and priced lowered?
There are a few TV shows now that set the homes for selling that helps see the difference of removing items, furniture, painting.
Good Luck
Sounds like you have good credit? Especially if you are gonig to spring for this out of your own pocket or credit.
Another thing to consider- how long has this listing been on the market? Is it vacant? Do you have a realtor represeting you (if not, automatically cut 3% off of the sales price, because that is what the agent will normally get on a deal anyway)?
If the house has been on the market for a while (3+ months), and if you get a feeling the seller is motivated from talking to the realtor, make a low ball offer contingent on your inspection and approval. Why not offer 180K if the seller needs to sell? If it gets accepted, cool, if not move on. Just keep in mind that realtor is working for the seller, never you, so do not confide in the realtor.
Need to give more details in future posts and look at the whole picture.
Good Luck.
Ok, I listen to your advise and I got some more information, I guess what happens is that since I am not an experience REI, I see only one wat, the sub to way or LO way which is what I have studied, but you are all right there is many other ways to make this happen in RE.
So.......
the house is listed as a 5 rooms, 2bed, i bath for $249K. Is in a great location 1/2 mile to the beach, 1/2 mile to the stores and a mile to Elem schools, great neighborhood. I did some reasearch and the the town assesments are as follows: 2002- $141,600 2003- 152,900 2004- 195,600
the town card list this property as a 3 bed 1 bath, then I went to the wells fargo website to check comp prices and it says in the same street within a 24 month period, the home prices value are as follow: Low $225, Average: $302 high: 385K
I called a realtor to get more inormation since is listed by a realtor and he said that the owner had it leased, 45 days ago he listed it , took a few weeks to clean it out after the tenant moved out and it's been listed for 15 days now. It has a new roof, septic system for 3 bedrooms, new siding, new hot water tank, brand new gutters and new stove and fridge, also there is hardwood all through out the house.
Ok, this is all the information that I have, at this point I am assuming that someone had it as a rental and for some reason doesn not want to hold on to it anymore, however is listed through and agent, so ...................................is there anything I can do anyways???? or am I wasting my time with this house.
You all made a good point that maybe they do have some equity but how do I find out that information unless I can meet with the owners.
thanks for all your help!
one more piece of information I have found, ( the internet is an incredible tool, what did we ever do without it ), anyways although a sad story I guess the owner was a really nice man who was know for having made millions in real state in this area, he passed away last september and he left his home and 2 others + 120 acres of land to a charity, however he was married for a second time and his second wife is still alive, that's the name listed as the owner in this property. That lets me to think that maybe after his passing last September he left her this home and now that the tenant is out she does not want to deal with it anymore so she listed it with and agent to sell it.
What do you guys think? still should I try to get in touch with her or should I just buy it thorugh the agent, or should I just pass all together,
As the other posters have mentioned...I don't think this makes sense as a rental. If there is no positive cash flow then its a no-go.
If you really think the house is worth 300+ then get it under contract for 249 or less and try to birddog the deal. It sounds like you may have a slightly distressed homeowner here and they may be willing to negotiate.