Do bare studs?

[Debbie]

Jeff and I were discussing about flipping may be out of the question for a year or two, depending on the market, plan to purchase MH, building a new house, etc.

Jeff and I have bought, rehabbed and held five units but, to current date, never sold. We've always enjoyed them. I did mentioned to Jeff that I've noticed several properties on the MLS that were down to bare studs due to fire damage here in Springfield and nearby towns. Of course, they didn't last long on the MLS. They ranged from $4K to $12K in fairly decent neighborhoods.

Hence the question: is it better to buy, rehab and sell (if not rent) a bare studs properties versus non-bared studs in terms of costs and time? Anything we may not be aware of?

BTW, I do wonder the consequences of C.L.U.E for those properties.....Would it be better to eliminate "old" studs and start new for the sake of eliminating insurance consequences?

Thanx. Debbie

[Aldo]

This is based on the info you provided which included no clue to the current (as is) or future (improved) value of the property.

You'll need to guesstimate the value you add to the property to determine whether that is a worthy venture. For example, buying at $12K and selling after completion for $25K and after spending $8K cash will, of course, net $5K+/- and that may be okay depending on the value you place on your time. You're a stay-at-home mom and Jeff is working which doesn't give you a lot of time for sweat equity. That leaves you with the choice between holding the property for a lot of time so you can get the work done yourselves or farming out the work which will dip deep into your profit.

A critically important issue to consider is the ongoing price correction. You've indicated that your area has not (yet?) been affected, but that doesn't make you immune. The future value that you assign to the improved property could be out the window in a matter of weeks, possibly before closing as recently happened to me.

I'm thinking that the correction should be completed within about four to six months. While this is my personal opionion, I'd advise against buying anything unless you have your finger on the pulse of the market and/or have some way of knowing that this will work for you.

[Debbie]

A critically important issue to consider is the ongoing price correction. You've indicated that your area has not (yet?) been affected, but that doesn't make you immune. The future value that you assign to the improved property could be out the window in a matter of weeks, possibly before closing as recently happened to me.

I'm thinking that the correction should be completed within about four to six months. While this is my personal opionion, I'd advise against buying anything unless you have your finger on the pulse of the market and/or have some way of knowing that this will work for you.

I acknowlede and agree to your statements. As stated in my post, there is no plan to buy for awhile due to a full plate as well as changing market. I was curious for future reference.

I am, however, surprised that your prediction for correction is within six months. I was thinking more like 1 - 2 years. I have noticed that your past predictions has been fairly accurate most of the time. Curious---how confident are you in your current prediction?

[Aldo]

The truth is that you're right and I'd like to believe that I'm right when I say that the market will turn around in four to six months. I truly believe that the market will turn around in that time, but a turn-around is not an overnight project. I have no doubt that this will take 1-2 years, possibly longer.

I'm, by no stretch of the imagination, a market expert. That is demonstrated by $3K/mo for mortgage payments on two personal residences, only one of which I occupy. That situation is a direct result of the local market going south about two months before I expected it to happen.