Need Your Opinion
Hello all you experienced Wholesalers,
I'm looking for some advice from those of you that have been in the Wholesaling business for some time now. I have a property I am possibly interested in but am a bit leary because of the specifics.
The house I'm looking at is an old antebellum style mansion with an advertised 10,000 sq feet. The house is situated on 7.3 acres with a fairly busy Shopping Center on one side and new townhome/golf community on the other.
The house needs ALOT of work. Not knowing the specifics since I just saw it from the outside, but from what I saw, I'd guess $80-100K worth of work, but would have a beautiful antebellum house when finished. New houses in this area are going for $75-85/sq foot, however, I would say this would be more like $55-65/sq foot realistically.
Now, the question is, has anyone ever worked on a property that would have this high of a resale value? Would a rehabber even be interested in it? Is the price prohibitively too high to make it worth a rehabbers time, with the fear that he wouldn't be able to find a buyer?
Thanks for any insight you might be able to provide.
That depends entirely on your numbers. If there is enough of a back end, a rehabber will probably be interested. It surely doesn't hurt to ask what it would cost to buy. When you get some hard numbers, let me know.
Bruce..
My guess is that 7 acres between a shopping center and a golf course is worth a lot more if it doesn't have a renovated antebellum house on it..
That is what I am thinking. I am also thinking TN is not that far away. -- I can learn to like country music.[ Edited by bnorton on Date 09/07/2004 ]
*laugh*
Actually, two points.
First, I had already thought about the bulldozer idea and was seriously considering it but didn't want to lead anyone there if they had other thoughts. And, second I'm a transplant to TN and don't really like country music, so its not a prerequisite for moving here. Though I would highly recommend our city to anyone (*insert shameless hometown plug here*)
Anyone else have any thoughts, other than trash the house?
From what you've given us, you say that conservatively the house is worth $550,000 ($55SF X 10,000SF). A money maker of a deal is 70% of ARV minus repairs.
In this case if you can pick the home up for $285,000 you can rehab the home and probably make money.
Is the lot worth more than that? Probably so.
My advise--don't tell anyone that you plan to tear the thing down. If the land is worth a lot more negotiate like you plan to keep this old junker of a house and remodel it. If people can't see the other possibilities you may be able to pick this thing up for a steal.
GOOD LUCK
Since the area seems to be going commercial, and your planning to renovate. What about turning into, or selling it as a potential night club or restaurant?
My 2 cents.
Try focusing on the buyer not the property. I too am in a hot market, and I have yet to buy a property that was listed on the Multiple Listing Service. All of the transactions that have involved a realtor have been pocket listings that never hit the MLS. All of my other acquisitions have been with motivated sellers, and those in preforeclosure. You get to these people by advertising and networking. You get the pocket listings by developing great relationships with realtors, and prove to them that you can close and get them paid.
yes I see you have fallen onto the guru philosophy of "anyone can invest anywhere". Just like me you are learning the hard way that is not true. My area is the same exact situation, the market is so hot that if you came in with a low offer or some sort of creative financing you would get laughed at, or ignored. now get ready because you are about to recieve a bunch of replys from people who know nothing about you or the area you live in but they are still going to say "you can do it" and "there is a motivated seller somewhere" and "dont give up". these are people who have bought into the theory of you can invest anywhere. you can choose to take there advice and waste your time, or you can think about other options. heres what I did, true the area I live in is very hot and overpriced for exsisting homes. so I found a spec home builder who could build a home for around 50 dollars a square foot, homes in this area are selling for 110 a square foot. now with this spec builder you get a good price by doing some of the work yourself..painting, landscaping, clean up etc etc but it is well worth the profit. my friend just sold his spec home and after all was said and done he held a check in his hand for 50k. I have one spec home started and another on its way, oh and all were done with no or very little down. Then I satisfied my need to buy and hold properties, but since my market was a cash flow joke I went out of state and found a partner and am buying in a market that is not so competative. bottom line is you cant believe what some of these jokers say about rei, you need to use some common sense and find out what the rei needs are in your town and go down that avenue, if there are none then find a town that has needs and invest there. good luck and to quote some of the gurus on this site, dont give up!
dlitedan,
Wow! hard on the gurus. I sure am glad I am not one of them. While you and I disagree on the ability to successfully invest in any market, we do agree that Rambler needs to change his approach.
I like your idea of teaming up with a spec home builder. That is just the "out of the box" thinking Rambler needs to do whether it is teaming up with a spec home builder, or working with other resources to get to motivated sellers, or getting a good source of pocket listings.
The bottom line Rambler is that it is always better to play in your sandbox where you make the rules than to play in someone else's. Be honest, be ethical, and just as important, be creative.
bnorton is right!!!
I also live in a very hott market, listed properties don't last but days, sometimes hours if they're at all desirable. You can make $$ in these towns but you've got to get directly to the owner. If you're just getting started with little money, don't count on realtors. They have their cash investors.
the only reason I call realtors anymore is to get a price on their nearby listing so I can determine comps on my potential investment. Don't get me wrong though, I'm glad to try and network !
You just have to be agressive to find or CREATE your deal through FSBO's . Sure it's a tough market but be tougher.
There will always be fixer-uppers which you can profit from. I've done very well with rehabber's in the last year or two. If you look in the right places, you'll find your motivated seller.
GOOD LUCK RAMBLER!
It looks like a lot of us are in the same situation. Thanks for the information guys.