What Would You Offer For This?
I have a seller stating that they are liquidating a 3/1.5/2 for $105K and will pay all closing costs and additional $3K cash at close. The monthly payment expected ~$775/mo. Essentially, I can get into the house at No $ dwn.
After doing a little research, the house has recently been appraised at $93K.
Is this a good deal, or would you try to present a less offer?
Thanks for all the responses!
So, essentially you are buying a house having an appraised value of $93K for a total of $102,000. First, how old is the appraisal and what are the comps in the area? IF (that's a BIG if, this is one of the lowest priced houses in the area, AND if there are no repairs/rehab costs, you might have a so-so deal but as you can see you are already paying way too much). What do you want to do with the house (rent, flip, L/O etc.) or is the house located next to higher valued homes? This will also have a big bearing on whether this is a good deal. What is the rental history in the area i.e. strong or weak demand? The payment of $775 seems high, so you must be in a highly taxed area and/or have a higher interest rate. What are the loan particulars? I would base my decision primarily on getting answers to these questions (including how this fits into your investment plan). Otherwise, just black and white, you are paying way too much for this house no downpayment or not! Good Luck--there must be more to it, right? Craiggans
I did check the appraisals for more houses on the same street (next to it) and they range from $90K to $105K so far. I am waiting for my re agent to get me the comparables. I know the neighborhood a little, but I don't know the loan specifics yet. I will go view the house this week. I am looking to flip or L/O depending on the comps. I do know the neighborhood is fairly nice w/ a good location for school/parks/convience.
Thanks for the info/questions to get answers to. I will definately get those being new to investing...this MAY be my first deal.
Great Questions so far.
I would run the numbers to see if you are cashflow positive. Or if you can be positive if tennants pay expenses or increase your profits.
If it were cashflow positive then I would go ahead with the deal knowing that rental increases will put more money in your pocket.
If a deal costs you no money, puts cash in your pocket, and has no carrying cost and positive cashflow, how can it be a bad deal? Even if the value never goes up the mortgage will be paid of and you will have equity w/o any money out of your pocket. I have room for 100 of these deals tomorrow. :-o