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BassNBrew said:
Jeff Pasquino said:
I said:
Mike Anderson said:
I said:
Where can I find step by step instructions on how to complete a FSBO?
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First, please update your profile to include the area you are operating in. It seriously does help.Need tons more info here. Selling? How far along are you?
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I have owned the house a little over a year, I just recently rented the house out and the renter says he will want to buy 6-12 months timeframe. I had to pull the house off of the market because with the agent I had to over price the house just to break even so I couldn't sell using the agent.
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This is an easy one then.If you have a renter that wants to buy, give him a new lease called a lease / option.Write up a sales price you'll take a year from now and ask the renter for $$ now for option consideration (non refundable - NROC). Typically 3-5% of the sales price.Give him a year to buy, and if it expires he owes 2% more to extend the option. You can even raise the rent $100 and give him $75 of it towards buying the house.Have a title company draw up lease option contract (or a local RE lawyer). Done.Then - get the renter hooked up with a lender to see if they can buy the house. If they can, close. If they can't, have the lender work w/ them towards getting their act together to qualify in 6-12 months.Make the credit repair / lender part mandatory for the lease.Good luck.
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Be sure to get this recorded if it's required in your state. An option in my state is NOT valid unless it's recorded.
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BNB,IIRC, North Carolina just passed awful laws against L/O. Is that right?-Jeff
 
KRS,

I am looking around your Zip codes tonight. I'll just post as I go.

My Wife's family lives in AL. :shudder:

First thought is it's too funny that this area is called West Central, and there is a Linwood Cemetery. I operate in an area called West Central, with a Cemetery called Lindenwood. :spooky:

31901

What are you thinking for a Rental? SFH, Multi? I love Multies myself, more profit per building, and even if a unit is open, you are getting some money towards the mortgage. Looks like only 34 total properties are available here. It's mostly centered on 13th street. What is the area like?

Biggest question, what can you get for rent around here?

For example, the cheapest Duplex I can find is: MLS ID#: 80423

$70K for a Duplex, and I can't see what the taxes are? Just Simple, simple math has you needing say a Grand in rent to even look at it, and really, you want $1,200 or $1,400 as a slam dunk. What does something like this rent for? If it's $400 a side, and you still pay water, you can't touch something like this.

YIKES, I just noticed that one of the units is rented for $260.00 a month, and you do indeed pay water. You need the other unit to rent for at least $500.00 just to not lose money monthly. I can't see this working.

Just for fun, this is the type of property that is all over my area. MLS ID#: 75978

This is what I look for, I LOVE these things. But even here, at $250K, the total rent fully rented out is $1,460 a month, or you lose money every month for the privilege of having tenants. :thumbdown:

I could buy this thing for $100-120K around here, and my rents would be higher.

I don't see how a Multi works in this area.

You said you had zero fix up skills, and for all I know, this is the worst street in the whole area, but a 2 bedroom house for $9,500 would be an easy conversion. MLS ID#: 82056

You shouldn't get into this if you don't have the skills, surely a contractor would price you up pasts when the thing can ever be worth? Remember, this is guessing, I don't know your market. Only that I could turn this house around with my own hands in a month, it's that small and easy if you could do the work yourself.

Look at this dive with the cars all over the front yard. I freaking Realtor couldn't get a better picture? Freaking stupid. MLS ID#: 75890

Anyway, what could you rent this for?

If you can, put some thoughts in about this area, I certainly know nothing about your market.

 
KRS,

31903

Are you kidding me? MLS ID#: 78673

I wondered why in the heck the Realtor would have paid extra to make it a "Showcase" home in the MLS. When you see a "Showcase" home, understand that the home is harder to sell. Why would a Realtor pay extra for the highlight if it would sell easily? Anyway, lock that one in the back of your brain for the future.

So now I see why a $30K DUPLEX is a showcase home. The freaking rents are $325 and $125 a month? :eek: It would actually most likely make say $15.00 a month, maybe $30.00 a month. However, if that $325 a month unit was open even one month is a given year, every penny of profit for the year was just wiped out.

More of the same MLS ID#: 81441

It does make a small profit, but not enough to justify the effort.

If this MLS ID#: 77170

is anything at all you want to get into, I need a bunch more info here. With 12 Units at $68K, it is SURELY a money maker. Now, that has to be 12 Eff or 1 bedrooms at best, so TONS of headaches, but this is Surely a money maker!

Wow, I just poked around some more, it looks like a 3 bedroom is going for under $500.00 every time in this area.

Give me an idea of what you could rent this for: MLS ID#: 81732

Does everyone freaking park in the front yard? Give me an idea of what this 4 bedroom/2 bath would rent for: MLS ID#: 82115

What is the area of AVONDALE HEIGHTS like? From 2K miles away, it seems nicer than Benning Hill.

What could you rent this one in Pine Hill for: MLS ID#: 81571

I really really liked MLS ID#: 78121 until I saw it was rented to Sucktion 8.

If there is a play in this market, it's finding the right SFH. That 12 Unit is a money maker without a doubt, but I don't know if that's what you want to jump into first. Figure you aren't renting that to high end renters. It could be a ton of headache, and quick turn over. You would need to go in with an Iron Fist and be the boss period. I don't know what you are looking to do. Lot of money there though. It is likely so cheap because it's trashed and/or filled with druggies.

A 12 unit for $68K?!?!?! What investor wouldn't JUMP at that on paper. Something is wrong there. You just have to decide if it's you that fixes it.

 
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KRS,

31904

This area up by Lake Oliver seems nicer, for example, only every 8th picture has a car parked in the front yard here. ;) What's it like?

You would have to get say $450 a two bedroom unit here to make any of these Multies work. The only affordable Multi where they give the rents is about $250.00 too low to make sense.

Ridiculous. I just found a nice Triplex for $120K (And that is one of the cheaper ones that look decent) where the total monthly rent is $1,125. :thumbdown: Another lose money for the privilege of Tenants deal.

I don't get this type of market, how can people ACTUALLY sell Multies at this Price to rent ratios???

MLS ID#: 79719

There are 2 or 3 of these EXACT houses here for say $28-30K. What can you rent this for? It needs to be say $450 at the lowest DEPENDING on the tax rate in your area. I can't believe how many one bedroom houses there are in your market. I doubt I could even find a one bedroom house in my market if I looked a month.

Look at this picture: MLS ID#: 81331

The Realtor didn't even bother to get out of the car for the picture. I hate Realtors. Anyway, this is a 2 bedroom for $30K. Real world, what could you rent this for? Is $500.00 a month way too far out of the ball park?

Here is another one MLS ID#: 82519

ASSUMING that you could HONESTLY pull $500 a property in rent here, this is the first place I could see actually making money and expanding. Be the King of 2 Bedroom houses in this area that you buy for $30K, and rent for $500.00 a month. I absolutely see this as a workable sustainable plan. You could do very well with this route.

No clue if you can really, honestly get $500.00 a month off them, but if you could, you could dominate this small niche, and make good money. There are a lot of these in this Zip.

 
KRS,

31906

This looks to be East of town, what is the area like?

MLS ID#: 80892

Wow, a Property that makes money before you beat the seller down! I just can't fathom one bedroom units that rent for $150 a month. :eek:

This whole Market perplexes me. The Properties are over priced for the rents, and the rents are NOTHING. If the rents where ANYWHERE near anything worthwhile, you could make a mint on the pricing here. My Market has similar pricing, with 2.5 times or so the rent.

Wow, another one that makes money on paper, and it's even a side by side 2 Bedroom each side. MLS ID#: 80810

I like this one, it stands out so far in your market. It even has a yard, and oh my god, there isn't a car in the middle of it.

What's the catch? Terrible area of town? I really like this property.

The cheapest three Multies could all be worthwhile, but nothing else in the Zip code is anything you should bother with. I like MLS ID#: 78920, but it barely breaks even on paper.

There are 17 two bedroom homes in this zip code for under $30K. Can you get $500.00 a month out of a two bedroom home?

If so, that is where I see the money in your market. You could build an empire of little (Easy to work on) two bedroom homes all renting at $500.00 a month, and build a real foothold in your RE market. That seems to really be the only worthwhile financial play I can see so far.

 
KRS,

31907

I haven't gotten into it yet (This is sort of a "blog" of thoughts), but with Fort Benning right beside this area, how much does that help? Do you have built in renters from the Military base? Give some thought to what advantages or disadvantages you might have here.

MLS ID#: 81888

This 4-plex will make a couple hundred a month, (maybe $225.00 a month). Tight for my liking, but given what I have seen while looking, this is far and away one of the better Multies in your market.

MLS ID#: 81129

Neat property. Loses money, but it's neat.

So far, rents seem a lot higher in this area.

I only see one, maybe two SFHs that work in this market, UNLESS the rents are much much higher.

 
KRS,

31909

The only Multi in the entire Zip code that is for sale losses about a grand a month to run. So, ummm, NO.

For SFH, unless you are getting say $600.00 a month in rent, barely anything works.

What could you rent this for? MLS ID#: 79908

That is likely the very best SFH deal in the zip code.

 
Hey Mike, thanks for all the tips. I was only looking at SFH, not the multis. I've only been living here a year, so I don't know all the neighborhoods that well.

I'll try to respond to you as best as I can in a second.

 
KRS,

Sorry that took me a few days since we last talked about it. Been ungodly busy. Hope it helps?

From what I can see, the real way to make money in your market (If my assumptions are correct???) is to buy 2 bedroom Homes and rent them for $500.00 a month all day long.

You could build a real empire that way. I just don't know if you can get the rents?

Anyway, I would be willing to run through anyone's market for them if they would like.

The wife is all over me to come and eat. I'll try and get back later to see if you have any thoughts.

 
Mike Anderson said:
KRS,

31909

The only Multi in the entire Zip code that is for sale losses about a grand a month to run. So, ummm, NO.

For SFH, unless you are getting say $600.00 a month in rent, barely anything works.

What could you rent this for? MLS ID#: 79908

That is likely the very best SFH deal in the zip code.
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Not sure, we planned on finding some we liked, and driving around to see what the neighborhoods are like. That is near the AFLAC building, which is a big employer around here. That looks like it's getting near "Southside" which is considered the poor black area around here.
 
Mike Anderson said:
KRS,

I am looking around your Zip codes tonight. I'll just post as I go.

My Wife's family lives in AL. :shudder:

First thought is it's too funny that this area is called West Central, and there is a Linwood Cemetery. I operate in an area called West Central, with a Cemetery called Lindenwood. :spooky:

31901

What are you thinking for a Rental? SFH, Multi? I love Multies myself, more profit per building, and even if a unit is open, you are getting some money towards the mortgage. Looks like only 34 total properties are available here. It's mostly centered on 13th street. What is the area like?
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From what I've seen on 13th street, it depends. The further away from downtown you are, the nicer the area is. There's a really nice public park in the area, with a track/football field/tennis courts/basketball/baseball fields etc etc. There's also a big jogging trail that goes around the entire park.I used to go to that park with my GF to jog. I had remarked to her at the time that the houses in that particular area were pretty nice. As I understand it, it's a mixed area. There's some bad neighborhoods near by and some nice areas too.

 
Mike Anderson said:
You shouldn't get into this if you don't have the skills, surely a contractor would price you up pasts when the thing can ever be worth? Remember, this is guessing, I don't know your market. Only that I could turn this house around with my own hands in a month, it's that small and easy if you could do the work yourself.
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:kicksrock: How hard is it to get the skills? I know some people who have the skills to do that sort of thing, so maybe I could hire them cheaply to help me on houses we bought, until I got the hang of it myself.

 
KnowledgeReignsSupreme said:
Mike Anderson said:
You shouldn't get into this if you don't have the skills, surely a contractor would price you up pasts when the thing can ever be worth? Remember, this is guessing, I don't know your market. Only that I could turn this house around with my own hands in a month, it's that small and easy if you could do the work yourself.
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:kicksrock: How hard is it to get the skills? I know some people who have the skills to do that sort of thing, so maybe I could hire them cheaply to help me on houses we bought, until I got the hang of it myself.
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If you bought a $10K house in cash, you could do what you wanted to, for as long as it took. Everything can be figured out if you have the right mindset and just go at it. Ask a ton of questions, and figure it out. On these little tiny houses that are all over your market, I doubt anything would really be overwhelming. Read a bunch, ask questions, tear stuff apart and see how it works.But you might not want to put that kind of energy into it.

 
KRS,

The biggest thing you NEED to know is what do things rent for in your area. Get the newspaper, see what rents listed are, drive to the property and see what it is. You need a better working of the rents in your area. This is not the place to fly by the seat of your pants if you want to make money.

If you just want to be a LL, and own a cool house, buy one, and let the chips fall where they might.

You need to know the rental market for pockets you are interested in.

 
Bass,

28078

695 Properties in the Zip code, and Not one single Multi for sale. Wow.

Just so I can get a Baseline MLS ID#: 586687 What's something like this 2 Bed/1 bath in Huntersville going for in rent?

NC, I am assuming you can easily get $500-600? At $600.00 this is a slam dunk. I don't know the area at all. It's your basic shack.

The next one remotely worth while is MLS ID#: 613561, but you would want a grand a month to really feel safe. Figure it breaks even around $700-800 depending on the taxes.

Once again, want at least a grand depending on area taxes. MLS ID#: 612937 Really you want $1,100.00 a month just to feel safe.

Those are the only three properties period in the Zip that seem interesting depending on the rent. Any chance Lake Norman really drives up the rent?

 
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Bass,

28031

Once again, not a single multi in the whole Zip code.

I am guessing that Lake Norman might really drive this area? Is it a get away? Weekly rentals a possibility? Either the area is depressed, it's White hot, or it's depressed, but a good eye can see something here. I doubt there is an in between, unless it is in it's gentrification right as we speak.

Anyway, that is where I am going to guess your thoughts are at. MLS ID#: 601022

Take this little ranch. It's the exact 2/1 that is all over KRS's market. It has Easy interstate access, right beside an elementary school, and within blocks in two directions to the water. Small street right off the interstate, so figure there is shopping/commercial/food and lodging right beside it, and it might be a commercial track buyout at some point if the area takes off? God it's little. Anyway, At say $800 a month it feels safe. It might be less, but I have no clue on the taxes for the area.

This is right beside it, and one of the better deals in the market. MLS ID#: 581364 I just have no clue on the rents around here. Can you ball park it?

I am not bothering with the Condos. Someone already made the most money there.

MLS ID#: 592874 This is the cheapest thing I can find actually on the water. Can this area support weekly rentals?

 
Bass,

28036

There are two Multies here. The first looks to lose $600 a month to operate. The second one looks like it only loses $1,700.00 a month with even 10% down. :thumbdown:

I haven't gotten into it, but I would think over by the water and the highway would be better in general.

And it looks like I would be wrong just in property value. Unless you are pulling over a Grand on a SFH here, nothing in the market is really worth while. Maybe you can rent Properties for Thousands down by River Run?

***************

Now remember Bass, I am not looking to break even, I want a profit. I think there are some in the last Zip that could do that? Interesting Market.

How much of a pull is Lake Norman?

 
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We just drove around to see some of the listings you posted.

Mike Anderson said:
If this MLS ID#: 77170

is anything at all you want to get into, I need a bunch more info here. With 12 Units at $68K, it is SURELY a money maker. Now, that has to be 12 Eff or 1 bedrooms at best, so TONS of headaches, but this is Surely a money maker!

A 12 unit for $68K?!?!?! What investor wouldn't JUMP at that on paper. Something is wrong there. You just have to decide if it's you that fixes it.
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This is definitely a money maker... if you're selling crack and meth at the front door. The place is completely broken down and there's squatters there. I walked inside real quick to see what it looked like and they are efficiencies... Living room/bathroom/kitchen. There were lots of dirty mattresses, clothes and a not too pleasant smell. I'd probably have to hire security to keep the bums away from the place.I dunno the first thing about fixer uppers, but the way to fix this place is probably to hit it with a wrecking ball several times.

What could you rent this for? MLS ID#: 79908
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This was a strange neighborhood. Basically in a lower middle class at best area. The particular neighborhood was strange though. The house and property looked decent and we could actually see that one being fixed up and rented. I'd say about 1/3 of the properties in this area were really run down. Then right at the end of the block, there were these two nice corner lots that were really fixed up. One of the houses had a new black mercedes parked on the street. There were several other similarly nice houses in this area with nice cars parked. Odd.$496.16 in property tax.

You said you had zero fix up skills, and for all I know, this is the worst street in the whole area, but a 2 bedroom house for $9,500 would be an easy conversion. MLS ID#: 82056
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All the houses in this area were carbon copies of this one. Pretty depressed looking area, but you gotta think that someone will want to rent here. Even if it's only $200 a month, the numbers should work if it isn't too involved in fixing up.
Look at this picture: MLS ID#: 81331

The Realtor didn't even bother to get out of the car for the picture. I hate Realtors. Anyway, this is a 2 bedroom for $30K. Real world, what could you rent this for? Is $500.00 a month way too far out of the ball park?
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Probably the worst area we went to of all the neighborhoods.$219.08 in property tax.

Here is another one MLS ID#: 82519

ASSUMING that you could HONESTLY pull $500 a property in rent here, this is the first place I could see actually making money and expanding. Be the King of 2 Bedroom houses in this area that you buy for $30K, and rent for $500.00 a month. I absolutely see this as a workable sustainable plan. You could do very well with this route.
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This was the last placed we checked. There was someone pulling up and getting out of their car as we got there. They were walking around the house and pointing at things. I got the impression they were there for the same reason as us. According to my GF, she said the best you'd get for rent in this neighborhood would be $350.
 
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Mike Anderson said:
Bass,

28078

695 Properties in the Zip code, and Not one single Multi for sale. Wow.

Just so I can get a Baseline MLS ID#: 586687 What's something like this 2 Bed/1 bath in Huntersville going for in rent?

NC, I am assuming you can easily get $500-600? At $600.00 this is a slam dunk. I don't know the area at all. It's your basic shack.

The next one remotely worth while is MLS ID#: 613561, but you would want a grand a month to really feel safe. Figure it breaks even around $700-800 depending on the taxes.

Once again, want at least a grand depending on area taxes. MLS ID#: 612937 Really you want $1,100.00 a month just to feel safe.

Those are the only three properties period in the Zip that seem interesting depending on the rent. Any chance Lake Norman really drives up the rent?
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Hi Mike...first, thanks for your time.The first one has been pending for 2 months. I tried to look at it in the spring and the agent didn't have a key. We tried for a week to get in and gave up.

The other two would rent for about $700 a month at best...looks like no AC and old. $950 in this market will get you a 1 yr old home, 1200 sf, one car garage, priced around $135K.

 
Mike Anderson said:
Bass,

28031

Once again, not a single multi in the whole Zip code.

I am guessing that Lake Norman might really drive this area? Is it a get away? Weekly rentals a possibility? Either the area is depressed, it's White hot, or it's depressed, but a good eye can see something here. I doubt there is an in between, unless it is in it's gentrification right as we speak.

Anyway, that is where I am going to guess your thoughts are at. MLS ID#: 601022

Take this little ranch. It's the exact 2/1 that is all over KRS's market. It has Easy interstate access, right beside an elementary school, and within blocks in two directions to the water. Small street right off the interstate, so figure there is shopping/commercial/food and lodging right beside it, and it might be a commercial track buyout at some point if the area takes off? God it's little. Anyway, At say $800 a month it feels safe. It might be less, but I have no clue on the taxes for the area.

This is right beside it, and one of the better deals in the market. MLS ID#: 581364 I just have no clue on the rents around here. Can you ball park it?

I am not bothering with the Condos. Someone already made the most money there.

MLS ID#: 592874 This is the cheapest thing I can find actually on the water. Can this area support weekly rentals?
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Probably $550 or $600 for the first. Listing saids needs work. That's usually means $10K around here. Weekly rentals are so-so. The water at that location isn't good enough to be a pull and looks to be seasonal. That neighborhood isn't the best, but is improving. That home would rent for about $1400 a month.

 
Mike Anderson said:
Bass,28036There are two Multies here. The first looks to lose $600 a month to operate. The second one looks like it only loses $1,700.00 a month with even 10% down. :thumbdown: I haven't gotten into it, but I would think over by the water and the highway would be better in general. And it looks like I would be wrong just in property value. Unless you are pulling over a Grand on a SFH here, nothing in the market is really worth while. Maybe you can rent Properties for Thousands down by River Run?***************Now remember Bass, I am not looking to break even, I want a profit. I think there are some in the last Zip that could do that? Interesting Market. How much of a pull is Lake Norman?
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This (and the other two zips) encompass most of my local area. Very nice area and a big draw. I haven't run across anything profitable in close to a year. I was offered a $160K house for the payoff of $139K last week. House rents for $900 a month and I could push it to $1000. Payment is $1150 with 5% down. After commissions and closing fees there's $7K profit. However you're out $1150 each month it sits and we're headed towards the slower months. I'd like to do it, but the reward doesn't seem to justify the risk. I could sit on it for 6 months and eat the -$150 / month. It's a ##### when $20K in equity still won't at least get you to break even. :cry: Multis...They are as common around here as hot good football and good BBQ is in Yankee land. When they do come up, $400K will net you about $3000 / month in rent. :thumbdown: Now you know why I may want to talk with you.
 
KnowledgeReignsSupreme said:
Why is 12 eff or 1 bedroms TONS of headaches? We are going to driveby this one to look at the neighborhood.
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KnowledgeReignsSupreme said:
This is definitely a money maker... if you're selling crack and meth at the front door. The place is completely broken down and there's squatters there. I walked inside real quick to see what it looked like and they are efficiencies... Living room/bathroom/kitchen. There were lots of dirty mattresses, clothes and a not too pleasant smell. I'd probably have to hire security to keep the bums away from the place.
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:lmao: It was an easy call from 2,000 miles away as well. ;)
 
Random said:
Mike,

If you get a minute, look at my area code. 45365.

TIA
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Random, Starting to look. I will say that I have driven through Wapakoneta many, MANY times in my life heading to MANY a night of drunken debauchery at OSU.

OK, just a quick look, and I could make money here. There is alot of opportunity. What I need is a break down of where it is that you actually want to operate? Are there areas you would avoid? Is the whole city fair game?

For example, I am assuming that Main and say North streets divide the town (Could be anything, but that looks around the center?). Anyway, I need a point of reference.

Just to the NE of that intersection, you find this: MLS ID#: 270551

Side by side Townhouse style duplex. From the exterior look of it, I assume it's 2 bed each side, and a bath or a 1.5 bath a side. At $35K for the property before you haggle, and depending on Taxes, you would need to make say $400-450 a month to break even. I might argue that if this is like much of the Midwest, you can get $400 a side in this set up, if not $450.

If that is the case, one side pays the mortgage and bills, and the other side is profit.

There are a ton of deals in your market depending on the rent?????? Give me some thoughts on what stuff rents for in what parts of town. I know that is a huge question, and will take some research, but you can make money here, and I could point you in a good direction with more info.

There is a Ton of money to be made in RE in the Midwest.

 
Mike Anderson said:
Random said:
Mike,

If you get a minute, look at my area code. 45365.

TIA
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Random, Starting to look. I will say that I have driven through Wapakoneta many, MANY times in my life heading to MANY a night of drunken debauchery at OSU.

OK, just a quick look, and I could make money here. There is alot of opportunity. What I need is a break down of where it is that you actually want to operate? Are there areas you would avoid? Is the whole city fair game?

For example, I am assuming that Main and say North streets divide the town (Could be anything, but that looks around the center?). Anyway, I need a point of reference.

Just to the NE of that intersection, you find this: MLS ID#: 270551

Side by side Townhouse style duplex. From the exterior look of it, I assume it's 2 bed each side, and a bath or a 1.5 bath a side. At $35K for the property before you haggle, and depending on Taxes, you would need to make say $400-450 a month to break even. I might argue that if this is like much of the Midwest, you can get $400 a side in this set up, if not $450.

If that is the case, one side pays the mortgage and bills, and the other side is profit.

There are a ton of deals in your market depending on the rent?????? Give me some thoughts on what stuff rents for in what parts of town. I know that is a huge question, and will take some research, but you can make money here, and I could point you in a good direction with more info.

There is a Ton of money to be made in RE in the Midwest.
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Ok,That is one of the worst areas in town. Jefferson to Broadway down to Elm/East/Shelby and back up N Main. That doesn't mean I wouldn't consider buying there, but it is rough. There is one other place equally as bad and its just to the north east side of the hospital. Again, I'd do it if the opportunity was right, but its rough.

MLS ID#: 269367 is very similar, in better condition, in a way better part of town, but is about twice as much. Not sure which route I'd rather take.

Also, I believe all of the $30k-$60k (and others) multis are owned by the same person. If I'm remembering correctly an old lady has had them basically forever and is now in assisted living so the properties are being managed by a family member that obviously doesn't want them. :lightbulb:

I need to get my flip sold so I can look further into this. But again, not sure if I want to take this route (definately a slumlord).

 
KnowledgeReignsSupreme said:
We just drove around to see some of the listings you posted.

Mike Anderson said:
If this MLS ID#: 77170

is anything at all you want to get into, I need a bunch more info here. With 12 Units at $68K, it is SURELY a money maker. Now, that has to be 12 Eff or 1 bedrooms at best, so TONS of headaches, but this is Surely a money maker!

A 12 unit for $68K?!?!?! What investor wouldn't JUMP at that on paper. Something is wrong there. You just have to decide if it's you that fixes it.
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This is definitely a money maker... if you're selling crack and meth at the front door. The place is completely broken down and there's squatters there. I walked inside real quick to see what it looked like and they are efficiencies... Living room/bathroom/kitchen. There were lots of dirty mattresses, clothes and a not too pleasant smell. I'd probably have to hire security to keep the bums away from the place.I dunno the first thing about fixer uppers, but the way to fix this place is probably to hit it with a wrecking ball several times.

When I said "You just have to decide if it's you that fixes it.", what I really meant was decide if it's you that goes to war with a crappy drug infested slum lord building. Is it you that will be cleaning the place out, evicting people, being the ball busting, head smashing (no, not actual violence), but the guy that can stand up to anything no matter what it is. The guy that will do whatever it takes in every way to make money here. Depending on the surrounding area, there is big money to be made here. There is enough money to tear down walls and turn that 12 into 6 nice units that might actually attract decent people. But it has to be that this building is the one eye sore/problem in the area, not that it is just another crappy building in an area of crappy buildings.

With a 12 that is a pile, there is a strong chance that it's this particular building that is driving down the whole area. You could NEVER buy a SFH in a crappy area and turn it around by yourself with one small property. You will lose. When I go into a new area, I try and get 2-3 houses in a row, or on the same block. I can fix things if I own a chunk of the block.

A lot of money can be made on this property, but you need to be prepared to go to war multiple days in a week, never let up, and put yourself in spots that you really didn't want to be in every once in a while. This is NOT the thing to take on unless you know this area like the back of your hand.

What could you rent this for? MLS ID#: 79908
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This was a strange neighborhood. Basically in a lower middle class at best area. The particular neighborhood was strange though. The house and property looked decent and we could actually see that one being fixed up and rented. I'd say about 1/3 of the properties in this area were really run down. Then right at the end of the block, there were these two nice corner lots that were really fixed up. One of the houses had a new black mercedes parked on the street. There were several other similarly nice houses in this area with nice cars parked. Odd.$496.16 in property tax.

Well, two things are going on here. The easiest thing to say is Drug money and move on.

I would suspect that the corner houses are nicer in size, build, and detail. Back in the day, Corner houses were the most coveted property in any community. The well to do got the corner lots. The well to do now days want to live far out away from the city, and not on corners. They want more privacy, and Corners don't allow for that. I would suggest that the corner houses have always been in good shape, with professionals living in them that love living downtown. The rest of the area has fallen off over the years, while the better houses stayed the same or improved.

Assuming it is still going down, This type of area is prime for an upswing if you go in all the way. But you have to go in all the way. You can make money here, and be the unofficial Mayor of the area, but it takes that kind of commitment. The payoff can be huge. Go to the neighborhood meetings (Also the best way to find REALLY cheap properties in an area, the neighbors know who owns what, and who can't handle it any more, they even tell you how to contact the owner. I picked up my last $5K Duplex this way). Anyway, you have to get in. Join the association, be part of the crime watch taking a shift every couple of weeks where you and the GF just walk the area (Another way to find the deals, and be seen, after a while, people walk up to you with deals)

Do your research first.

I doubt it from your description, but I am 2K miles away, and can't tell. It may be that the area is starting to swing up just barely. If so, it's already started, and you can just jump on someone else's work product.

Then again, it could just be drug dealers.

Given the property taxes, I would suspect that $400.00 is about your break even point at asking price. Remember that is just years of experience and doing it on the fly. A better number can be arrived at if this is a go for you. So, for me, I would want $600.00 in rent, as I make $200.00 a unit as my baseline. You have a tighter market, and may accept less? In many markets just paying the property off over time is the goal. It's not my area, but post here, or look locally about an interest only loan so that you see the other side of the coin. In that set up, you NEVER pay any principle every, but you can pull greater profits. Not my way of going, but there can be a mindset to just pull money, and sell it in 10-20 years for at least what you have in it, after pulling $300-400 a month for years on end. The property will never be yours, but you make money.

I'm not sure what you are looking to do.

You said you had zero fix up skills, and for all I know, this is the worst street in the whole area, but a 2 bedroom house for $9,500 would be an easy conversion. MLS ID#: 82056
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All the houses in this area were carbon copies of this one. Pretty depressed looking area, but you gotta think that someone will want to rent here. Even if it's only $200 a month, the numbers should work if it isn't too involved in fixing up.Hire the work out, and $300 a month won't pay you back.

Some of this is what do you want to be?

Me? I have an honest passion for old Victorian 1880's properties with all the detail. I buy them in my own neighborhood, and every time I do one, it helps my area and ALL of my property values. I want to own these treasures for the rest of my life, and pass them to my children.

I know people that are the Land Contract weasel types. They don't care about anything, and just make money, the hell with anything and everyone.

I have a buddy in Atlanta that works inside the loop on EXACTLY the type of 2 bedroom ranch that is all over your market. He is out to make money, and does a good job, but he is not passionately invested in his properties. And he has some horror stories like you wouldn't believe working with lower end renters. However, that is the ONLY place in all of Atlanta that he can find where you can actually make money.

I don't care to rent to lower end renters. I have a few, but they drive me crazy. I have one family that pays me late with my MONSTER late fee every month. The extra money is great, but It drives me insane. I get furious about getting more money. I've had one single bounced check in the last decade. That stuff drives me insane. We screen like crazy, and on average I bet I turn down 4 out of 5 application that actually get to the submission stage. I generally weed out say 30 people on an average opening before they even get to the app stage. My list of dis-qualifiers is huge.

However, I am taking back my downtown one block at a time, running off the locals, and bringing in college students and down town professionals. I am attempting to engineer my neighborhood.

Where I am getting here is that although "someone will want to rent here", you will be out of the game in no time flat if your mindset is hand over the keys, and just expect the guy who pays $200 a month is going to treat you right. Your families future deserves more thought.

Low balling the rent isn't the answer. Renters look in bands of rent. I've said this before, but picture what you would rent. If you opened the paper up, and saw a rental for $50.00 a week, would you even go and look at it? No. A good renter figures out their budget, and sees that they can pay about $500.00 a month. In their mind, anything at $300 a month is going to be dive in a drug infested area. It could be the Tasmahal but they wouldn't even look. If I have a property that is dragging, I actually raise the rent to get into a whole new band of renters who haven't seen my property but who are more likely to be quality. I seriously raise the rent of slow movers all the time.

Look at this picture: MLS ID#: 81331

The Realtor didn't even bother to get out of the car for the picture. I hate Realtors. Anyway, this is a 2 bedroom for $30K. Real world, what could you rent this for? Is $500.00 a month way too far out of the ball park?
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Probably the worst area we went to of all the neighborhoods.$219.08 in property tax.

Something is wrong when you see that the picture was taken from the car. In this case, the Agent was most likely afraid to get out by herself.

Here is another one MLS ID#: 82519

ASSUMING that you could HONESTLY pull $500 a property in rent here, this is the first place I could see actually making money and expanding. Be the King of 2 Bedroom houses in this area that you buy for $30K, and rent for $500.00 a month. I absolutely see this as a workable sustainable plan. You could do very well with this route.
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This was the last placed we checked. There was someone pulling up and getting out of their car as we got there. They were walking around the house and pointing at things. I got the impression they were there for the same reason as us. According to my GF, she said the best you'd get for rent in this neighborhood would be $350.$350 for a 2 bedroom house. In my area, that is the worst of the market, and an area I won't operate in. You can't make it work at asking with that rent.
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BassNBrew said:
Mike Anderson said:
Bass,

28078

695 Properties in the Zip code, and Not one single Multi for sale. Wow.

Just so I can get a Baseline MLS ID#: 586687 What's something like this 2 Bed/1 bath in Huntersville going for in rent?

NC, I am assuming you can easily get $500-600? At $600.00 this is a slam dunk. I don't know the area at all. It's your basic shack.

The next one remotely worth while is MLS ID#: 613561, but you would want a grand a month to really feel safe. Figure it breaks even around $700-800 depending on the taxes.

Once again, want at least a grand depending on area taxes. MLS ID#: 612937 Really you want $1,100.00 a month just to feel safe.

Those are the only three properties period in the Zip that seem interesting depending on the rent. Any chance Lake Norman really drives up the rent?
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Hi Mike...first, thanks for your time.The first one has been pending for 2 months. I tried to look at it in the spring and the agent didn't have a key. We tried for a week to get in and gave up.

The other two would rent for about $700 a month at best...looks like no AC and old. $950 in this market will get you a 1 yr old home, 1200 sf, one car garage, priced around $135K.
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At those rents, the first one is the only one that was doable. You could have even gone as low as $500 a month on it. The second one is lucky to break even, and the last one is a dog. I was hoping the last one might pull more as it is the cheapest of the next upgrade of level on the MLS.
 
BassNBrew said:
Mike Anderson said:
Bass,

28031

Once again, not a single multi in the whole Zip code.

I am guessing that Lake Norman might really drive this area? Is it a get away? Weekly rentals a possibility? Either the area is depressed, it's White hot, or it's depressed, but a good eye can see something here. I doubt there is an in between, unless it is in it's gentrification right as we speak.

Anyway, that is where I am going to guess your thoughts are at. MLS ID#: 601022

Take this little ranch. It's the exact 2/1 that is all over KRS's market. It has Easy interstate access, right beside an elementary school, and within blocks in two directions to the water. Small street right off the interstate, so figure there is shopping/commercial/food and lodging right beside it, and it might be a commercial track buyout at some point if the area takes off? God it's little. Anyway, At say $800 a month it feels safe. It might be less, but I have no clue on the taxes for the area.

This is right beside it, and one of the better deals in the market. MLS ID#: 581364 I just have no clue on the rents around here. Can you ball park it?

I am not bothering with the Condos. Someone already made the most money there.

MLS ID#: 592874 This is the cheapest thing I can find actually on the water. Can this area support weekly rentals?
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Probably $550 or $600 for the first. Listing saids needs work. That's usually means $10K around here. Weekly rentals are so-so. The water at that location isn't good enough to be a pull and looks to be seasonal. That neighborhood isn't the best, but is improving. That home would rent for about $1400 a month.
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Well, you already know that $600-650 depending on taxes is your break even on the first one. :thumbdown:
 
BassNBrew said:
Mike Anderson said:
Bass,

28036

There are two Multies here. The first looks to lose $600 a month to operate. The second one looks like it only loses $1,700.00 a month with even 10% down. :thumbdown:

I haven't gotten into it, but I would think over by the water and the highway would be better in general.

And it looks like I would be wrong just in property value. Unless you are pulling over a Grand on a SFH here, nothing in the market is really worth while. Maybe you can rent Properties for Thousands down by River Run?

***************

Now remember Bass, I am not looking to break even, I want a profit. I think there are some in the last Zip that could do that? Interesting Market.

How much of a pull is Lake Norman?
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This (and the other two zips) encompass most of my local area. Very nice area and a big draw. I haven't run across anything profitable in close to a year. I was offered a $160K house for the payoff of $139K last week. House rents for $900 a month and I could push it to $1000. Payment is $1150 with 5% down. After commissions and closing fees there's $7K profit. However you're out $1150 each month it sits and we're headed towards the slower months. I'd like to do it, but the reward doesn't seem to justify the risk. I could sit on it for 6 months and eat the -$150 / month. It's a ##### when $20K in equity still won't at least get you to break even. :cry: Multis...They are as common around here as hot good football and good BBQ is in Yankee land. When they do come up, $400K will net you about $3000 / month in rent. :thumbdown:

Now you know why I may want to talk with you.
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I just don't see how Land Lords can operate in some of these markets. I see Flipping, and other options. I even see Interest only loans. But a LL that wants to build, I don't get it, and the market may never correct. :mellow: I opened my Spread sheet on properties, and just pulling the first bunch in a row, here is what I am pulling monthly in profit taking mortgage, utilities, taxes, and insurance into account (This does not include maintenance, advertising, or day to day expenses), just monthly Profit after PITI and Utilities. I have to open a bunch more things to get actual profit.

$335.95, $354.86, $395.05, $401.34, $248.44, $278.83, $658.33, $140.79, $245.16, $374.44, $423.87, $651.83 and so on.

I can't clear $100K on a flip like other areas of the country. I haven't made $10K in appreciation in the last month due to the market. In the Midwest, you can build a sustainable income, but most likely you aren't going to hit any home runs. Just slow and steady.

 
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Random said:
Mike Anderson said:
Random said:
Mike,

If you get a minute, look at my area code. 45365.

TIA
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Random, Starting to look. I will say that I have driven through Wapakoneta many, MANY times in my life heading to MANY a night of drunken debauchery at OSU.

OK, just a quick look, and I could make money here. There is alot of opportunity. What I need is a break down of where it is that you actually want to operate? Are there areas you would avoid? Is the whole city fair game?

For example, I am assuming that Main and say North streets divide the town (Could be anything, but that looks around the center?). Anyway, I need a point of reference.

Just to the NE of that intersection, you find this: MLS ID#: 270551

Side by side Townhouse style duplex. From the exterior look of it, I assume it's 2 bed each side, and a bath or a 1.5 bath a side. At $35K for the property before you haggle, and depending on Taxes, you would need to make say $400-450 a month to break even. I might argue that if this is like much of the Midwest, you can get $400 a side in this set up, if not $450.

If that is the case, one side pays the mortgage and bills, and the other side is profit.

There are a ton of deals in your market depending on the rent?????? Give me some thoughts on what stuff rents for in what parts of town. I know that is a huge question, and will take some research, but you can make money here, and I could point you in a good direction with more info.

There is a Ton of money to be made in RE in the Midwest.
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Ok,That is one of the worst areas in town. Jefferson to Broadway down to Elm/East/Shelby and back up N Main. That doesn't mean I wouldn't consider buying there, but it is rough. There is one other place equally as bad and its just to the north east side of the hospital. Again, I'd do it if the opportunity was right, but its rough.

MLS ID#: 269367 is very similar, in better condition, in a way better part of town, but is about twice as much. Not sure which route I'd rather take.

Also, I believe all of the $30k-$60k (and others) multis are owned by the same person. If I'm remembering correctly an old lady has had them basically forever and is now in assisted living so the properties are being managed by a family member that obviously doesn't want them. :lightbulb:

I need to get my flip sold so I can look further into this. But again, not sure if I want to take this route (definately a slumlord).
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Not going to kid you here, it takes a ton of work to clean up a property. But, there is NO reason you have to be a Slumlord because you bought a property from a Slumlord. Say you buy a 4 plex that is beyond crappy with current tenants. As soon as you buy it, you kick out the worst tenant (Or the unit you can turn around the fastest), and fix up that unit. Let it be known that Random doesn't play, it's your way or the highway, and anyone is on the street if they don't clean up their act. Put high up security lights all over the place (Roaches don't like light), install some fake cameras with the sign that they are being recorded. Follow the plan. Kick out a slug, fix it up, get a better tenant, kick out the next slug, wash, rinse, repeat. It takes a while, but you can overcome and win, and in the end, get better rent, and have a higher property value.

It's the kind of fixing up I was posting to KRS about.

Now, you might not want to get into all the Meth heads in your area. You don't need to. It's just your level of comfort. You don't have to be a Slumlord.

We have time, as you are still flipping, and I can do this to find a Flip property as well, but it is much much harder, and you have to do a bunch more legwork.

If you are looking to be a LL, no rush, but at some point, grab the paper on the day rentals are most advertised (Here it is Thurs and Sunday), and get an idea of what areas rent for. We need to know how much you can bring in. No big rush.

 
Mike Anderson said:
KnowledgeReignsSupreme said:
Why is 12 eff or 1 bedroms TONS of headaches? We are going to driveby this one to look at the neighborhood.
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KnowledgeReignsSupreme said:
This is definitely a money maker... if you're selling crack and meth at the front door. The place is completely broken down and there's squatters there. I walked inside real quick to see what it looked like and they are efficiencies... Living room/bathroom/kitchen. There were lots of dirty mattresses, clothes and a not too pleasant smell. I'd probably have to hire security to keep the bums away from the place.
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:lmao: It was an easy call from 2,000 miles away as well. ;)
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I had a dream last night about that place. We had hired a bunch of Mexicans to go in there and clean the place out and we were going to start fixing it up. Maybe it's a sign?
 
Wow, I can be unbelievably stupid sometimes. My GF's uncle does subcontractor work for a living. He owns his own business with another guy. He's come to our house and fixed things for us. Why I'm just now realizing he could be a great resource is beyond me.

The only thing about it, is he refuses to take money from us. When he came and replaced our hot water heater, we tried to give him some $$ and he wouldn't take it. It's not the first time. He thinks we are poor and can't afford it (long story).

Her other uncle owns his own exterminator business.

:wall:

 
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Can you sign your house over to someonelse and let them take over the payments? Would there be closing cost as if you were selling the house?

 
I said:
Can you sign your house over to someonelse and let them take over the payments? Would there be closing cost as if you were selling the house?
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No, most loans have a "due of sale" clause which means the entire balance has to be paid in full before new ownership can be recorded.
 
BassNBrew said:
I said:
Can you sign your house over to someonelse and let them take over the payments? Would there be closing cost as if you were selling the house?
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No, most loans have a "due of sale" clause which means the entire balance has to be paid in full before new ownership can be recorded.
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Half true, half false.Yes you can sign over a house - this is called "Subject To the Existing Financing", abbreviated "Subject To" or even "Sub2".

It is also called "getting the deed".

Here is an article that explains this in detail.

Sub2

You basically clean up the issues (back payments, etc.) with the loans, pay the mortgage for a few months while you repair it / fix it up, and then attract a new buyer that buys it and cleans the title once again.

There is a "Due on Sale" clause that can be enacted by the lender, but that rarely (if ever) happens.

 
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Mike Anderson said:
KnowledgeReignsSupreme said:
This is definitely a money maker... if you're selling crack and meth at the front door. The place is completely broken down and there's squatters there. I walked inside real quick to see what it looked like and they are efficiencies... Living room/bathroom/kitchen. There were lots of dirty mattresses, clothes and a not too pleasant smell. I'd probably have to hire security to keep the bums away from the place.
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When I said "You just have to decide if it's you that fixes it.", what I really meant was decide if it's you that goes to war with a crappy drug infested slum lord building. Is it you that will be cleaning the place out, evicting people, being the ball busting, head smashing (no, not actual violence), but the guy that can stand up to anything no matter what it is. The guy that will do whatever it takes in every way to make money here. Depending on the surrounding area, there is big money to be made here. There is enough money to tear down walls and turn that 12 into 6 nice units that might actually attract decent people. But it has to be that this building is the one eye sore/problem in the area, not that it is just another crappy building in an area of crappy buildings.With a 12 that is a pile, there is a strong chance that it's this particular building that is driving down the whole area. You could NEVER buy a SFH in a crappy area and turn it around by yourself with one small property. You will lose. When I go into a new area, I try and get 2-3 houses in a row, or on the same block. I can fix things if I own a chunk of the block.

A lot of money can be made on this property, but you need to be prepared to go to war multiple days in a week, never let up, and put yourself in spots that you really didn't want to be in every once in a while. This is NOT the thing to take on unless you know this area like the back of your hand.
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Realistically speaking... assuming that this building is in a good enough area to sustain it... how much would it cost to completely renovate this building with a contractor in a worst case scenario? The company that owns this is paying $1k in taxes just to have an eyesore. Maybe they are getting fined out the ### for it also? My coworker's father works for the city for the inspections & codes department. Maybe he could provide me some useful information?I'm going to drive around that area again when I get a chance to, but my initial impression of that neighborhood is that it isn't a neighborhood. It's basically that and small industrial/commercial businesses in the area. At least it's not in a war zone.

They bought it for $60k in 1997, not sure why they think it's worth MORE now. For some reason, I can't get this place off my mind. Scare me away Mike. :) All I can think of is six units bringing in $400-$500 each...

 
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KnowledgeReignsSupreme said:
Realistically speaking... assuming that this building is in a good enough area to sustain it... how much would it cost to completely renovate this building with a contractor in a worst case scenario? The company that owns this is paying $1k in taxes just to have an eyesore. Maybe they are getting fined out the ### for it also? My coworker's father works for the city for the inspections & codes department. Maybe he could provide me some useful information?I'm going to drive around that area again when I get a chance to, but my initial impression of that neighborhood is that it isn't a neighborhood. It's basically that and small industrial/commercial businesses in the area. At least it's not in a war zone.They bought it for $60k in 1997, not sure why they think it's worth MORE now. For some reason, I can't get this place off my mind. Scare me away Mike. :) All I can think of is six units bringing in $400-$500 each...
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I did a court records search on our county webpage.They received a notice to demolish or repair on November 23 2005. They had 45 days to demolish or repair the building or be fined. Well... it's been quite a bit longer than 45 days now.The building was found unfit for occupancy and so dilapidated, unsanitary and/or unsafe that it creates a serious hazard to the health and/or safety of the public (I could tell that just by looking at it for 1 minute, I didn't need a hearing. :shrug: ).According to some city ordinance, since the cost to repair it is more than 50% of the physical value of the building they have to remove or demolish the building... so why haven't they yet?Failure to comply will result in a citation for violations or will cause the structure to be placed on the Council Agenda for demolition...So why are they trying to sell this place again?
 
Mike Anderson said:
Rents are $250 per month and each is rented. I think $275-$300 is a fair price.
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I am in a lower Market as well.Now, please understand that my Wife built this website, it is not from a Professional. That said, it looks pretty good now, where it used to be terrible.

Here is a list of my Available properties, you can see that I deal with Lower rents than much of the country. I do hold out for excellent candidates, and expect my units to stay in great shape.

A 900 sq ft one bedroom here would be $375-$425.

My Available Properties
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I went and looked at this property on Thursday. All I can say is that the next time I feel like life isn't going my way, I'll visit this place and count my blessings. 2 of the 3 units were in bad condition and one unit was packed with 6 people...3 being kids. Laundry piled 3 ft deep in the closets, food laying everywhere, and a 6 month old lab leaving fragrance throughout.Really too much liability for my tastes. Potential great return, but who knows about the roof, electrical system, heating system, etc. No feasible way to remodel short of spending big bucks and this neighborhood will never appreciate. 2 bedroom waterfront condos can be rented as low as $750. With two people sharing, that's $375 a month for a modern place in a nice area on the lake. That's the reason for the low market cap on 1 bdrm rents. I don't think I'm ready to jump into the market of high risk tenants at this time.

Mike...great website!
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Bass, Given what you said, as long as the property will pass basic inspection: roof, etc, this is exactly the type of place I want to STEAL with money at close.The seller is in trouble. You know it, I know it, everyone in the market knows it.

This guy is in over his head. Would an offer of $50K be worth his while? It just might be. $60K with $10K in allowances. You won't know unless you come to the table. If this is something you want, an off the record conversation is most likely in order.

Figure out what it takes to rehab, fix/clear the "Stacking" problem, Holding costs until you find good College GIRLS, the whole nine yards.

This kind of worthless property owner is exactly the guy I would hit for 10K in my pocket at closing and just STEAL the place from him. He has lost control, and needs out in the worst way.

Check the local records, and if he owns it outright, it is prime for a takeover. If he owes the $82K, run screaming.
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Can you explain what you mean by "hit for 10K in my pocket at closing"?
 
Jeff Pasquino said:
BassNBrew said:
I said:
Can you sign your house over to someonelse and let them take over the payments? Would there be closing cost as if you were selling the house?
Click to expand...
No, most loans have a "due of sale" clause which means the entire balance has to be paid in full before new ownership can be recorded.
Click to expand...
Half true, half false.Yes you can sign over a house - this is called "Subject To the Existing Financing", abbreviated "Subject To" or even "Sub2".

It is also called "getting the deed".

Here is an article that explains this in detail.

Sub2

You basically clean up the issues (back payments, etc.) with the loans, pay the mortgage for a few months while you repair it / fix it up, and then attract a new buyer that buys it and cleans the title once again.

There is a "Due on Sale" clause that can be enacted by the lender, but that rarely (if ever) happens.
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That's probably because they don't know about it and a form of loan fraud is occuring.
 
Mike Anderson said:
Actually, I make a limited punch list before I buy the place as I first walk through it. Later, when you are at home with your thoughts, I want to go over the list, and see what I can handle, and what I can't. Also, it helps you get things in logical order. You certainly want to replace the Houses Main water cutoff before you ever have the water turned on just as a matter of precaution (I've been burned on that too many times). Knowing that, you know to put anything that needs water off for a few days.
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Why is that?
 
proninja said:
A couple thoughts - Mike's done a very good job answering this question, I'm going to chime in with some financing thoughts as that's what I do.1. Talk to a local mortgage lender about a rehab loan. The process works something like this: $180k sales price, you put 20% down. You get an appraisal done that is assuming the work on the property is already done, and you get a bid from a licensed contractor. If the work is going to cost $50k, and the property is going to be worth more than $230k when you're finished, the bank is cool with that. You turn all of that into the lender, and they will actually pay the builder for you on set timelines - something that, in your case, I believe would be a very good thing for a couple reasons.#1 - This gives you a great excuse if the wife starts to add a bunch of stuff and wants to change things - "Honey, we already made this decision, and it's out of our hands now." (Since the guy's your buddy, I'm sure you can work something out if you really need an extra)#2 - You don't stretch yourself completely thin. Cash is good.#3 - This requires you to do all of your homework before taking on the project - not only do it, but put it on paper and prove to someone else that it's a project worth taking on - if the bank doesn't want to loan on it, that's good info for you to have right there.There are two "closings" on a rehab loan, but if you go through a good lender, there is actually only one loan involved. With certain lenders, you don't get to lock in your rate until the project is complete. You don't want that. The first "closing" is when you buy the property and work gets started. You are charged the payment on your original loan monthly, and typically are given the option to either pay interest only on the draws to the contractor as you go, or roll that interest into the final mortgage balance. After the work is done, the loans consolidate into one with a pre-determined interest rate, and you go from there. At that point in time you can decide to put extra money in your property should you choose.There's so many things going on in here that I've got no idea if I answered any of your questions or not, but feel free to fire away with more.
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Wow thanks. You answered a question that's been on my mind for a while that I hadn't gotten around to asking. Good thing I'm reading through this thread start to finish.
 
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