Possible First Deal, Help....
I am pretty much a newbie in this biz, I have been reading and reading this site, and have watched my father, for the last year, make an absolute killing in this biz....I have done a few birdogs, but I think I am ready to do my own deal, and may have found it....
....here are the details.....3/2, 1600 square feet, sold for $145,500 two years ago, is assessed at a little over 100K.....the bank is selling it, is a repo of somesort.......it needs quiet a bit of cosmetic work, it doesn't have central a/c, I would probably need to put that in, the inside and out needs to be painted, new carpets, etc........I would estimate rehabbing at $20-25K....now the good part is that it is in a great area, (3 schools within walking distance, major highways with 1/4 mile)...It has a lot of potential to bring great positive cash flow if I rented it out (after rehab)....the asking price is $104K....I would estimate that after rehab, it would appraise at 140-150k (I checked the comps in the neighborhood).....I plan on throwing them a low ball offer of 65-70k, but paying no more then $80-90k, lets say I paid 80K, and put in 30K worth of work, I still think that would leave me with a lot of profit to make, and I can rent this place out 1200-1300 all day long....
My questions are
A) being a newbie, and not knowing to much about rehabbing, should I stay away from something that needs a lot of work (I have heard countless stories about people who aren't scared of rehabbing and in return making lots of money on these deals)
B) does this sound like a good first deal???
C) if I do think it is worth it, how do I even begin, I call the bank and make them an offer, and put up earnest money?? or what?? because it is a bank house, are there other steps??
Thank you for any advice, and if I don't make since in a certain question or detail, please let me know so I can elaborate....
Your repair estimate sounds a little high. In a house of this size you should be able to rehab for under $15,000.00 including the new hvac system and ductwork. I do not recommend you buy this house to hold. Flip the house.
Michael,
So do you think that I should get it under contract and then just assign it to another investor, or purchase and wholesale?
It sounds like a great deal to me, I would definitly go for it. But you might want to take Michels advice, then shadow, mabey even help out the investor you flip to so you can see exactly how a rehab is done start to finish.
But as for question B, it has been my experiance that a Real Estate agent is normaly selling the REO. But if they are not, the REO department at the bank can some times be rather difficult to get ahold of.
Best of luck,
James
Thanks a lot for the input so far, ya'll (southern word for you all
) are really give me some great ideas of what to do with this thing....I am going to make my offer and keep ya'll up dated...thanks again, anymore input would be appreciated, good luck and good investing all....
If you want to attempt jumping in feet first why don't you find a local contractor and bring them in there before making an offer and get some budget pricing from them, Add 10% then make your offer. If you get the house you can decide whether to break up the work to save some money or bid the job out to three contractors. It does not take being able to do all the work yourself to manage home repairs
TBARBER
why flip?????????
If you have a father who is experienced why don't you let him navigate you thru it??
Listen man - golden rule of REI. D&V = document and verify EVERYTHING before you do ANYTHING.
You need estimates - just like any business get at least three repair quotes. Don't flip the thing if it falls in your criteria - do the deal. If your deal criteria formula is set up right, you don't lose.
Go get it man.
one last thing - NO earnest money! That is for the rookie buyer. It is NOT required no matter what some agent says.
I really appreciate everyones feedback so far......thanks a million....
David,
You mention that earnest money is for rookies...why do you say that? Are you telling me that I never need to put any money down no matter what kind of deal it is? I'm not doubting you since I'm a rookie but I am very interested in how to get around it...please explain!
Thanks
I'll put down earnest money to seal a deal anytime, it don't matter to me... $100.00, $50.00, NEVER a huge chunk like they're always asking for.
yeah jam said it - NEVER what they are asking. Most RE agents think its requisite - its not. If they make it an issue, give them $50.
bottom line, if you, as an investor, put $2000.00 or whatever they request a huge, "I don't know what I'm doing flag goes up" .
hope that helps.
In my are it is popular for investors to put up an earnest money note instead of cash, and then it is paid at closing or later. If I am the seller I would like to see cash, but everthing is negotiable. I did run into a title company that refused to escrow a closing because there was no earnest money. They were worried about who would pay there fees if the deal did not go through.
i have always given a check for a hundred bucks. they hold it till closing so it's only on paper. it has never been a big deal.......kenmax
p.s. the deal looks good go for it.