Great Deal Quitman Mississippi

[Dan Auito]

Here's the lowdown: Directly from the potential sellers lips.

Because of my husband's failing health which would make
it difficult for us to move right away, I would actually prefer
that we sell our property to an investor who would be happy
to rent the property and enjoy a hassle-free positive cash
flow of $200-$300 per month (depending on the financing)
for a year or two until property values in this area start to
rise again.

Quitman is the county seat of Clarke County,
Mississippi and has a population of about 2,500.

Here's a link to find out more:
http://www.visitclarkecounty.com/ccstory.cfm (http://www.visitclarkecounty.com/ccstory.cfm)

This is an economically depressed area that is just
now beginning to turn around. House prices have hit
rock bottom and sales are soft yet good rentals are
much in demand.

Here is an offer you could present to a potential investor:

Selling price: $79,000 (not negotiable).

The monthly mortgage payment on $79,000 for 30 years
at 7% interest would be $525.58. In addition, the investor
would need to add the monthly cost for property taxes
(about $30/month) and insurance (about $40/month),
for a grand total of $595.58 (just under $600).

If the new owner/investor is agreeable, we would
continue to occupy and maintain the property as
renters on a renewable 1 year lease for $800/month
and sublease the rental unit to offset our costs.

Under those terms, we would agree to sell
the property immediately and pay the standard
6% real estate commission ($4740 on $79,000)
to the person or company that actually transacts
the sale.

We're looking to make a deal that would truly
be "win-win" for everyone concerned. Do you
think this would do it? Please let me know
your thoughts.

Further information:


The two homes for sale are located on one large city
Lot.
The 1st home is a white
two-story frame house with about 2000 square
feet of living area, built in 1949 or 1950. It has
four bedrooms, 2 full baths, central heat and air,
a woodburning stove, sunroom, and original
hardwood floors. It also has an outside attached
laundry room and workshop connected to a patio.
We put a completely new new roof on the
house in 2005 (thanks to Hurricane Ivan) and my
husband has replaced almost all of the original
windows and doors and added additional insulation.

The 2nd home is a red single-story
600 square foot home built on a slab. My husband
built this little home as a rental just 6 years ago. It
has a washer/dryer, central heat/air, carpet and lots
of built-in cupboard and closet space. It also has a
small garden area in the back.

My husband is now in ill health and can no longer
handle the necessary upkeep (a very sad situation
for both of us) which is why we have decided to sell;
otherwise there would be no reason for us to move.

The asking price for both homes is $79,000


Best Regards--Looking forward to your call,
Sharon
__________________
Private message me if you're interested. Dan

[Randy (SELA)]

Any idea what the appraised value is?

[Dan Auito]

Somewhere around a million! Heh Heh Heh Actually I'll be speaking with this potential seller in about 25 minutes Randy. I'll post back up after the call.

[Dan Auito]

In 1999 the appraisal was $69,000 without the main house being improved to todays condition and the small 600sq/ft was not built at that time.
Sharon mentioned that if not for the economy which is on the rise there, the property would be worth $100,000.

P.S. Something to ponder, say you wanted to build 2600 sq/ft of living space at a meager $50 a square foot if you started from scratch, at that rate not including the land, that alone would cost a $130,000 in materials and labor alone!

[ThreeRiversREI]

The 2nd home is a red single-story 600 square foot home built on a slab. My husband built this little home as a rental just 6 years ago. It has a washer/dryer, central heat/air, carpet and lots of built-in cupboard and closet space. It also has a small garden area in the back.

My first question would be whether or not the 2nd home had appropriate permits pulled when it was built, if it conforms to local zoning, etc. or if it's a potentially illegal "granny flat" that could lead to problems long-term in being able to rent it out.

[k6saunde]

I'm Just a newbie so don't listen to me. Maybe I'm not seeing something in the way the deal is structured. But it looks like its a better deal for the current home owner than it is for the investor. She gets to stay where she is, sells the property to another who is responsible for all insurance, taxes etc., she has the right to rent out the second home taking the profit for herself, and says she will maintain the property, when she herself admits her husbands failing health will not allow him to maintain the property. In summary, she gets to stay in her home have all the benifits of home ownership without the hastles, and pay less than she was paying previously when she owned the home.

Where do I sign up???

[Dan Auito]

Looking at this as a long term investment this is the way I see it:

Price $74,000 after her discount for no real estate agent commission.

Local bank lends 60% or $44,000 at 7% for 30 yrs = $292.73
The second of $30,000 at 8.25% for 10 yrs = $367.96
Taxes $360/12 months equals $30 a month $30.00
Insurance $480/12 months equals $40 a month $40.00

For a total of PITI of $730.69

Sure a positive cash-flow of $70.00 a month isn’t going to make you rich but!

If you used cash or a seller held second(negotiate 0% rate) for 3 years then you essentially have all your original investment back and now are only paying on the original note which is about $275.00 a month plus $70.00 for taxes and insurance for a grand total of $345.00.

$800-$345.00= $455.00 a month positive cash-flow and all of this is not counting depreciation being taken.

Let’s also say that the homes combined are now worth $100,000 and you now owe $41,000 maybe someone just wants to walk away at that point with about $57,000 after closing costs for a 3 year deal?

You could also take into account you have great tenants that know the property, the property has been recently upgraded and rental demand in the area is strong, the current owners would become onsight managers tending to leaky fawcetts and toilets leaving you to worry about the big things which are either new or have been recently replaced.

[Dan Auito]

Picture #1: Front view.

Since this picture was taken my husband has replaced
the large picture window on the left with a much smaller
window and added lots of insulation to make this part
of the house much easier to heat and cool.

He also has replaced the front door, and replaced the
picture window to the right with 2 double-paned windows
that fit together in the same place where the original
window was.

The wood privacy fence you see on the right is part
of the property.


Picture #2: Back View.

Since this picture was taken my husband has replaced
the back door with a wider door and replaced all of the
windows on the north (right) side of the house. He has
also repainted that back porch area so it looks a
whole lot nicer than what you see in the picture.

The white building you see in the foreground is part
of the carport which my husband converted into a
rental unit.

The attached structure to the right of the patio
contains a workshop in one half and a large
laundry/utility room in the other half.


Picture #3: Carport

This is the carport which my husband converted
into a cute little red rental house!

He closed in the open side on the right, then added
plumbing, wiring, drywall, kitchen and bathroom fixtures,
cupboards, a big closet in the bedroom, central heat
and air, linoleum in the kitchen, carpeting, and LOTS
of insulation in the attic.


Picture #4: Layout of First Floor

1st Floor Area = 1.287.3 square feet


Picture #5: Layout of Second Floor

2nd Floor Area = 663.9 square feet

Total square footage: 1,951.2 square feet

Other Notes:

The rental unit has 600 square feet of living area.
Central heat/air to added
New roof put on in 2005
Lot size is approximately 70ft x 209 feetMy husband Warren and I co-own clear title to the property,
free of any liens or encumbrances.

If you need any further information to get started, please let
me know.

I can e mail you pics if anyone is further interested.

[Dan Auito]

Yes, most definitely. And the property is zoned R2. (Forgot to mention that.)

-Sharon



On 1/6/07, Dan Auito wrote:Thanks for the updated info Sharon. another question for you.Was the rental built to code with proper permits pulled otherwise recognized by the city as a legal dwelling. Thanks for that info. Dan

[tinae01]

Sorry Dan, I am with k6saunde on this one. This is not a deal - especially for a newbie who might look to you for answers.

If she'll take $25,000....that's a deal.

[Dan Auito]

Yes, this is more of a seasoned investors hardline, longer term hold. I personaaly still see it as a bread & butter deal that does have it's advantages if done right.

[ThreeRiversREI]

Yes, this is more of a seasoned investors hardline, longer term hold. I personaaly still see it as a bread & butter deal that does have it's advantages if done right.

The purpose of this site is the free exchange of information & education of it's newer members, right? :whistling

So, if you were closer to MS, how would you do this one "right"? As "good" a deal as this is supposed to be, why wouldn't you do it as an out of state owner/landlord?

Inquiring minds want to know!

[SPIVALAW]

If this were in GA, 2 rentals for that price that could appreciate, owner occupiers (so to speak)
Id buy it.
Missi- no thanks

[Dan Auito]

I would! The wife on the other hand is the one you have to convince. Absentee landlording does have it's drawbacks and she's hard to sway, even with a solid mgmt pair in place.

For someone in that vicinity it's worth further investigation.

[ThreeRiversREI]

I would! The wife on the other hand is the one you have to convince. Absentee landlording does have it's drawbacks and she's hard to sway, even with a solid mgmt pair in place.

For someone in that vicinity it's worth further investigation.

Okay, I can understand a partner not wanting to deal with absentee landlording, but you didn't answer the question about what sort of considerations you had in mind when you said "if done right".

[Dan Auito]

Basically, doing it right would mean , negotiating the deal to get some low interest owner held secondary financing , locking in a 2 year leaseback agreement with the current owners/managers along with stipulations regarding minor repairs duties.

Sure, allow them to sublease during that time, but also write in the $800.00 a month is not subject to the rental being occupied.

Just basic due diligence in structuring the deal.

Again, strong tenants base makes it a pretty non issue as far as worry goes.

[Randy (SELA)]

If it were closer, I would seriously consider it.

[Dan Auito]

I would work it as well. The distance thing always plays in as a factor. Grrrrrrrrrrrrrrrrrrr

[Bill H]

As a result of Katrina we moved right up the road from Quitman...Meridian.

I am not all that sure or enthusiastic that real estate is moving up quite like the lady projects. On any given day there are from 4 to about 12 new foreclosure listings in the local paper.

We bought in a new subdivision...there are three or four new houses here that have been vacant ever since we moved here the first of last July.

They have few lookers and so far no takers. We spoke with one of the builders and almost bought one he is working on for a very good price.

Quitman is a nice SMALL town if you like small towns. It is rural, nice, quiet, most amenities are here in Meridian.

Just my 2 cents

Good Luck,

Bill H

[Dan Auito]

I here ya Bill. She did say it was a small town inbetween the two larger ones. Some nice amenities, lakes, large springs etc... As a longer-term hold /Rental to a local investor I could see it working. Thanks Bill.

[k6saunde]

I here ya Bill. She did say it was a small town inbetween the two larger ones. Some nice amenities, lakes, large springs etc... As a longer-term hold /Rental to a local investor I could see it working. Thanks Bill.

Hey Dan,

Just out of curiousity, how long of a hold we talkin here?

[Dan Auito]

2-3 years. But for a local you could go indefinitely until your depreciation schedule ran out at 27.5 years.

Positive cash-flow investments pay for themselves so keep the goose until uncle Sam's incentives go away.