What would you do in this situation? I need help.

[miajules]

Hello All,

Yesterday, I came across a home for sale by owner. It's been vacant for a couple of months and was appraised last August for $508K. I've only been investing a month and eventhough I'm not as confident as I'd like to be, I contactd the owner via email and he wrote back by the end of today. I have yet to see the property, but the owner states that there is around $20K in repairs needed. The owner wants $475K for the house.

Can I make something happen? What else do I need to know? Any help would be appreciated and if I close this deal with the help of someone in this chatroom---that person will be glad they helped me...again, what can I do? If you need more info., let me know. Below is the owner's email response to my inquiry:



Yes the house is for sale
and in very good condition. The house is vacant and
move in ready. The only thing the house really needs
is updated counter tops and maybe flooring if someone
doesnt like the saltillio. The house was built in
1979 and is on 1.4 acres of horse property fully
fenced and gated in cave creek. The house is 4 bed 3
bath and is a tri level home. The house is very
rustic with a vega pole ceiling. There is a 12' high
by 10' wide stacked stone fireplace that we did. I
put in brand new windows and @ $8000 of new solid
knotty alder doors. The inside was painted 7 months
ago the outside was painted in july. Two evap and ac
units are @ 3-5 years old and the roof is 4 years old
and foam. The front patio was also remodled. The
mortage is not assumable with a balance 0f 235,000 at
5.25% 30 fixed and a 200000 2nd. I have an appraisal
as of 8/31/04 that is $506,000 and would like to get
475000-480000 if it is sold with out and carry backs.
if you need more info let me know.

[WilsonTaylor]

You asked whaitI would do..... Well, I would walk away from this one  and never look back.  The owner is asking retail for the house if the appraisal is 506k and he is asking 475k while the property needs 20k in repairs.  For a new investor, this is too much money to be risking with too little profit.  Your holding costs for this property are going to be over 3500 per month. Can you afford to pay that for 3 to 6 months while you are trying to complete the repairs and sell the property?  The most you could realistically offer for the property is 408k minus the fixup costs to avoid problems.

Keep looking.  A better deal will show up.

Wilson

[ARamirez]

miajules,

... and looking at Wilson's reasonable offer you will notice it is less than what the guy owes on the house.

The only thing that might make this a deal as it sits is if the guy was behind on the payments or was in some sort of trouble that he is not wanting to be known.

Quick question also. In you area what is the average, ball-park price of a SFH 3/2 maybe 1200-1400 sqft? If it is ... never mind I re read his description of the home and can tell that 500k for this home is because it is a luxury home. Tri-level, horse property, huge stone fireplace. Best to stick with homes that typical family home buyers are looking for as a new investor.