Newbie Need Help FAST!!!!

[WesGijr]

I'm a newbie in REI. But I think this could be a wonderful opportunity. Here is the case. A couple has a home that has a 49K mortgage. I did some online value searchs and the homes in that area go for about $80K. The property has the following problems. It sits in a flood zone, mold, plumbing and foundation issues. The owner is going to let the property go into foreclosure and just walk away from it. They are open to anything I want to do. They just want out of the property.

My qustion is what can I do?

[propertymanager]

I'm not at sure this is a good deal.  How much will it cost to repair the mold, plumbing, and foundation issues?  How much to rehab the property?  What do you plan to do with the property?  If it is to be a rental, what are the rents?  How much is flood insurance for this property?

[WesGijr]

Yeah, that is what I thought.  But the couple is willing to do anything. Even give me power of attorney if need be...hmmmmm.

Should I try to point another investor to this? Maybe "we buy houses any condition"

[propertymanager]

For what purpose?  You don't seem to know any of the answers to the questions I asked.  It's impossible to determine if this is a deal for anyone without knowing the details.

If I had a 1994 Yugo (junky car) that I owed $10,000 on, but I was willing to do anything to get you to buy it at $10,000, including giving you power of attorney, is that a good deal?  Would another car buyer want this deal?

[phlemboy]

Wes. I'd walk away from this. Since you said you're a newbie, I assume you don't have the expertise to fix the plumbing, foundation and mold yourself. If you have to hire the work out, you could be over the $80K average price for the homes before you know it. I don't see where you can profit from this. But you need to know the answers to a few questions.

1. How much will it cost to repair the house?
2. What are the "comps" ( actual house sale)?
3. Where are you getting the financing?
4. What do you want to do with the property?

These are just a few things you'll need to know. Tell us more about your situation and the specifics of the repairs. You'll get a more focused response..

[WesGijr]

Mold - $500 to $4000,
Plumbing - $900
Foundation - $8-12k
Flood problem $7K
Flood Insurance: Averge is less than $576per yr
How much to rehab the property? $20-30k
What do you plan to do with the property? Fix and Sale 
If it is to be a rental, what are the rents? $525 (Section 8) 3brd 2.5 bath den and living room.

The Couple just called me. The received notice today that that have 30 days before the property will be for closed. Here is what I’m thinking.

-Get a Home Inspection.

-Assume the loan
       -Catch up back payment $1500
       -Renegotiate for a lower rate 
       -Request that rehab cost be subtracted from overall mortgage balance
       -Request a line of credit to rehab the property
       -Request 3 months of no mortgage payment (add on the end of the balance)

-Complete rehab in 45 days

-Sale property or rent Section 8

[sellnbama]

You should figure a little more reasonable.I've done a good number houses and it's not what you see at first sight that throws you off budget/time.It's what you did'nt see.There is not a profit in this property at that price.

 If you can negotiate a short sale and give yourself more of a spread,then I would do it.It's way better on their credit to possibly have a judgement of the difference between the mortgage and what you paid,than a foreclosure.

 Always over figure your repair cost and under figure what you think it will sell for,,this way your hopefully safe.Best of luck to ya!

[jfpen]

Mold - $500 to $4000,
Plumbing - $900
Foundation - $8-12k
Flood problem $7K
Flood Insurance: Averge is less than $576per yr
How much to rehab the property? $20-30k
What do you plan to do with the property? Fix and Sale 
If it is to be a rental, what are the rents? $525 (Section 8) 3brd 2.5 bath den and living room.

The Couple just called me. The received notice today that that have 30 days before the property will be for closed. Here is what I’m thinking.

-Get a Home Inspection.

-Assume the loan
       -Catch up back payment $1500
       -Renegotiate for a lower rate 
       -Request that rehab cost be subtracted from overall mortgage balance
       -Request a line of credit to rehab the property
       -Request 3 months of no mortgage payment (add on the end of the balance)

-Complete rehab in 45 days

-Sale property or rent Section 8

I admire your enthusiasm. However, I think this deal is very weak.  If you had cash for the house and paid 30K this might be a good deal. You'd also have to have fix up money set aside. As it stands, it looks like there are too many contingent factors outside of your direct control, ie. assumable loan, renegotiate a lower rate, and your special requests. I would pass on this one.  If you don't own a house, try an owner occupied 203K loan on a multifamily.

JP

[justin0419]

I agree with what everyone else said regarding this not being a good deal.  If you even think this may be a rental, you'd better get the property for free based on your rehab numbers.  $525/mo will have you very negative each month if you have to put 20k into it as well as buying it for anywhere close to 50k. 
Don't do a deal just to do a deal.

[propertymanager]

Well, let's see....purchase price $49K, rehab $30k, catch up payments $1,500...total invested (if NOTHING else goes wrong) $80,500 for a house that's worth $80K.  How exactly is that a good deal?

[Vader]

Wes, step away and look at this situation objectively. Get the adrenaline out of your system and realize this is NOT A GOOD DEAL. If your first real estate deal is a stinker, full of pain and loss of money, you're going to want to quit, and you'll never become a successful real estate investor.

Swing for the fences, go for the home run on your first deal. RUN FROM THIS DEAL...please.

[justin0419]

It will be a good deal for the homeowner if you pay off their mortgage.  Not so much of a good deal for you though.  There will be others.  Getting emotional about deals is never a good thing.  Know your numbers and stick to them or be like all those idiots on the "flip that house" shows that lost their tails because they thought owning any property was a good investment.