Is This A Deal?

Comments(5)

• 
  DFresh5th August, 2004

  I vote for going for it. I too invest in the Socal market (LA Area) and believe the market will begin to slow down substantially in 8 to 12 months. I don't see any real worry in a market downturn at the time you will be putting your property on the market. Also, since your property after rehab should show better than most of the other properties out their you should not have to worry about the other homes competing for buyers attention.
  
  Looking at the numbers I definitely see a profit. If you are concerned about the amount of cash you are putting into the deal you could try to wholesale the property to another investor.
  
  Another option I would think about is to simply clean the place up for minimal dollars and try to sell it as a fixer for say $515k to a retail buyer. If you tried this strategy, you would still be able to take advantage of the current summer real estate market.
  
  Bottom line, if this was my deal I would do it. You need to determine which strategy fits best with your personal experience and available resources. Good luck..

• 
  Lufos5th August, 2004

  Dear Marlene,
  
  I think you are a little too close and when I check the recordings for San Diego County which I do every night right after telling my beads and rolling my dice. I see a little hesitation in that price range. Nothing exact just a little longer on the offer side. A little more multiple offers and counters.
  
  The answer if you can some how or other sell with a short downpayment and a layoff of the mortgage go for it. But I do not know your volume and your exposure to lenders who play that game. There are a couple of Mortgage Companies posing as ultimate lenders who are grabbing paper and straight into a portfolio of loans and the creation of bonds or who knows what. They are a layoff source for such paper. But in your case as a single practicioner. I would hesitate.
  
  Damn girl, is there not some foreclosure deals that you can grab a few days prior to sale? Could you not drop down a level or two where the great common hord of buyers are busy overpaying like crazy?
  
  Cheers Lucius

• 
  MarleneM5th August, 2004

  Dfresh and Lufos,
  
  Thanks for your replies. It is iffy, and the seller just let me know he'd be willing to come down $15,000 based on the inspector's report. I am still gathering bids for repairs to the basic structure.
  
  As for foreclosures, going to the TS is impossible. Hundreds of people go to those now, and bid properties up to pracies above market value. It's insane. Knocking on doors is my alternative.
  
  I've done a few of those, and they tough to do. People here are inundated with people knocking on their door, and they'd won't respond. We basically have to sit and wait for them to try and make an escape to their car.
  
  Are you suggesting I do more door knocking, or do you have another way to grab a good foreclosure?
  
  Thanks again.

• 
  JohnMichael12th August, 2004

  I would be a little concerned with the profit potential of this deal and having done a few transactions in the SD area.
  
  The average 3-Bedroom House sells for $430,000 in the SD area.
  
  Not knowing the exact location let's take the average of your most recent 3 comps.
  
  I base all my SFRH purchases on a hold of 6months.
  
  Market value $537,000
  Repair cost $ 32,000
  Interest $ 11,250 (based upon 6mth interest only) at 5% my normal rate
  Taxes $ 2,408 (based upon 6mth) at 1.07% SD's average property rate
  Insurance $ 2,900
  Utilities $ 3,222
  RE Comm $ 32,220
  Closing cst $ 8,055
  
  Total value less cost $444,945
  Less purchase price $450,000
  
  Looks like the only way to profit from such a deal is FSBO but a gamble.
  
  I try to keep my repair cost around 5% of market value as a general rule.
  
  I would normally purchase this type of property for around $410,000 or less.
  
  I always purchase based upon the what if factor!
  
  If I can't sell, can I lease op, can I rent, can I owner finance and so on.
  
  If I can profit I will do the deal, but if there is a strong potential for loss I walk away.

• 
  MarleneM19th August, 2004

  Just for you know, I walked from this deal. The building inspector found a bunch of problems, and the owner refused to be reasonable about givng me much $$ at escrow for repairs. kicker is that the real estate agent gave my $15,000 deposit check to the escrow company within a day of receiving it, and the escow company cashed it. When I called to see when I'd be getting it back, they argued that by law, the needed to cash it.
  
  I told then that by law, they needed to get that money back to me immediately. I had a replacement check sitting in my mailbox the next day.