Opinions on a possible new deal

[rughead64]

Asking price is $29,500. The house needs an estimate of $20,000 in rehab work. The house basically has a 70's look. Needs carpet, windows and it is panneled so I would eliminate the paneling and repair the walls and paint.The comps are going for $60,000.00-$70,000.00 currently.


The outside is EXTREMELY UGLY (peeling paint) and that is why I beleive it is not getting any attention.

The woman who owned the house passed on 2 months ago and the family wants out. I offered $17,500 and they came back with $25,000.

What is a good figure to settle on????

Another question is this. The house is wood siding. It is in solid shape but needs stripped and painted. My other option is siding. I have the siding deal at $7000.00 (included in my 20,000 rehab estimate). Am I better off stripping and painting or siding?

Any help is appreciated.


Rug

[dealmaker]

It's not getting any attention because it's overpriced (probably) Let's face it a $29K house is only going to be purchased by an investor, not an owner occupant.

Assuming your $20K number is correct (usually we underestimate), and $60K is FMV, the MAX you'd want to pay is $22K.

I would NOT re-side. Strip, sand and re-paint. $7K (1/3 of your budget) would blow out the numbers on this deal.

You say it needs windows. Is that some broken panes or you planning on replacing entire units?

Prime and paint the paneling. Don't bother taking it down! In a $60K house it will give a good enough look.

How much of this work can you do yourself?

I'd counter back to them at $19,950, and then probably take their counter to that. Just a personal thing, I don't like to drag it on too long.

If you get it at $22K or so and can get the rehab done for about another $12K or so you could have a nice money maker here.

Congratulations and let us know how it goes.

dealmaker

[Dan Auito]

The Dealmaker laid down some solid advice. I'd play his game on this one.

[Debbie]

My only comments would be:

1) What's the neighborhood have on their siding? If most have wood sidings, keep it wood.

2) It sounds like the family is hoping to continue the number game. If I were in your shoes, I would give a final offer of no more than what Dealmaker suggested. That is assuming that the neighborhood is the transition stage.

If it is not in the transition stage but in the "ghetto" type neighborhood, I would definitely give the final offer of less than what Dealmaker suggested. Perhaps $15K.

[rughead64]

Great input. A friend of mine rehabbed a home the street over from this one. He paid $15,000 and put $15,000 into it and sold for $55,000. This particular house is a bit larger and in better condition. I will counter with $19,500 and see what happens. I also have my buddy going with me on Wednesday to check it out for me as well.


Rug

[Aldo]

On the siding issue, I'd disagree with Dealmaker on the condition that, as Debbie suggested, most homes in the area are sided with wood. Even then, I'd give it a hard look. If the home needs to be scraped, sanded, primed, painted and caulked, the cost (unless you're doing the work) might cost $4-5K when all is said and done. Vinyl siding will cost $2-3K more, but will be good for maybe up to 30 years. The best paint job on the planet will be good for 5-7 years and most buyers probably know that. Run the numbers and you might find that vinyl siding would be a good investment in your investment.

[rughead64]

I actually may have a deal to get all of my siding at a 60% discount. If not all of it, most fo it. If that is the case, I will definatley side the house.


Rug

[ThreeRiversREI]

I actually may have a deal to get all of my siding at a 60% discount. If not all of it, most fo it. If that is the case, I will definatley side the house.

Most of the deals my partner & I are looking at right now are in a Historic District that won't let us use vinyl siding, but there is ONE out in South Side where it might be appropriate. If that discount isn't just a personal favor from one buddy to another, I might be interested in sending them some business.

[rughead64]

It is actually a HOME DEPOT closeout deal. They have some extras that they are giving away at $36.00 a square or roughly 60% off. Not sure if all of the HOME DEPOTS are doing this or not.

By the way did you get the numebr I sent you?

Rug

[ThreeRiversREI]

It is actually a HOME DEPOT closeout deal. They have some extras that they are giving away at $36.00 a square or roughly 60% off. Not sure if all of the HOME DEPOTS are doing this or not.

By the way did you get the numebr I sent you?

Interesting. Thanks for the tip. I'll have to do some checking.

And yes, I got the number & started running some numbers. I'll probably be calling the guy some time this week and if he & I work something out, I'll have to get your name, etc. to write you a check! :SM009:

[Randy (SELA)]

Always check electrical and plumbing. If it has one, fill the tub, let it drain and check for problems.

[rughead64]

Put in a bid for 19,500 on the property. Will see what happens.


Rug

[rughead64]

Look slike I may get out-bid as someone else has an offer out there.


Rug

[TommyOH]

That's ok Rug, these things happen. Just remember that your number worked for you, so don't change it just to get the property.

[rughead64]

I agree. Throiught eh process I found out a good friend is a contracter and flips himslef. We are going to work together. He has access to forclosures and has a good relationship with some realtors. Will keep you updated.

Appreciate all of the help.

Rug

[rughead64]

Back in the game. I got a call last night and they countered. They came at 23,900 and I countered with 21,500 take it or leave it. I gave them 24 hours. From all I have read and the input here, I willnot go any higher than 22,000. Basically I drew the line at 21,500.

Question: Getting a house that originally asked 29,500. Is 21,500 a good deal as far as negotiating???


Rug

[rughead64]

Got it at $21,500. They came down to what my final offer was.

Will let you all know how it works out

Appreciate the help


Rug

[k6saunde]

Got it at $21,500. They came down to what my final offer was.

Will let you all know how it works out

Appreciate the help


Rug

Hey Rug,

Your in Pittsburgh right? If so check out Pepper Home Improvements, I always see their add on TV. Says they will do vinyl siding on any home for I think its $3999. I Can't vouch for the company myself or for their rep or even the validity of the deal offered. But it may be a option for you.

Keith

[TommyOH]

Way to go Rug! Keep us up to date on what's happening.

[rughead64]

I should be closing in about 3 weeks. here is where I am right now:

*A buddy of mine will do the siding. he is getting me 2 extimates. 1 with him buying the siding and 1 with me buying the siding and him installing it. I also have 2 others getting me similar bids as well just in case. Looking like I can get out of that for about $4500.00 now.

*I have partnered with another buddy. He is handling all the financials on the REHAB side. He is also dealing with all of the rehab work (making calls etc.)The materials and/or labor he will cover. I will handle the mortgage/taxes/utilites, etc. Once the house sells, we will take our expenses and throw the rest into an account for House #2. We are also setting up a corporation of some sort.

Lastly, we already have an outline for what we want to do. We set our budget at $20,000.00. If something we want does not fit, then we start whacking it so that we stay under our budget.

Does it look like I am on track here??

Rug

[rughead64]

I need help. The COMPS on my deal were around 60,000 to 65,000. I am buying for 21,500 and was going to do a NICE upgrade with 20,000 for a total of 45,000 or so. Now here is my NEW dilemma:

The house directly across the street. Looks DECENT from the outside and is nicely renovated on the inside is asking 104,900.00!!!!!!!!!!!!!!!!!!


Do I add to my rehab project another 5,000-10,000 which makes it about 55,000 total, and do it up really nice, or do I stick to my original plan????

Originally i was planning on selling for 65,000. Now I am thinking with a NICE upgrade all around maybe it can go for 85,000-90,000.00


Rug

[k6saunde]

I need help. The COMPS on my deal were around 60,000 to 65,000. I am buying for 21,500 and was going to do a NICE upgrade with 20,000 for a total of 45,000 or so. Now here is my NEW dilemma:

The house directly across the street. Looks DECENT from the outside and is nicely renovated on the inside is asking 104,900.00!!!!!!!!!!!!!!!!!!


Do I add to my rehab project another 5,000-10,000 which makes it about 55,000 total, and do it up really nice, or do I stick to my original plan????

Originally i was planning on selling for 65,000. Now I am thinking with a NICE upgrade all around maybe it can go for 85,000-90,000.00


Rug

That would depend on alot of things Rug.

First is the house across the street a compairable home with same bed, bath, garage, square footage, yard size etc.

Second, Just because they put it on the market for $104,900 doesn't mean it will sell for that.

Third, it doesn't make much sence that you ran comps and came up with numbers in the $60-65 range. If properties are being listed and sold for $100,000+

I would run comps of properties that have sold within the past 6 months and within 1/2 mile of your home. Make sure your comps are in fact that. Not only should you use Bed, Bath, and type of home, but also square footage, among other factors. Try to find properties that are as close to your new home as possible in every way.

If you run the comps again and still come up with mid 60's. Then that is what the market is able to provide for your home in your neighborhood. Then I would have to say your neighbor may have pipe dreams of the actual value of their home and is trying to get more than what the house is worth. That is of course if his/her home is compairable to yours.

Keith

[rughead64]

The HUGE differences are that I have on street parking and this one has a nice 2 car garage. The other is the lot size. Mine is 35 X 45 and this one is 30 X 90. Room size is very comparable. The outside of mine will look much better than this one, as I have seen it. KS maybe you could give me an opinion. If you email me at rughead64@yahoo.com, I can email you the links for both houses. Maybe you can look at the listing info and give me your thoughts.


Rug

[rughead64]

Everyone I talk to (Banks)wants 20% down for me to borrow the $$$ for this deal. I do not want to put that kind of $$$ up front.

Any suggestions???

Rug

[Randy (SELA)]

Rug,
My banker loaned me 80% of the ARV on rehabs. That covered the purchase and rehab, with no money down. Maybe you should try a mortgage broker.

[k6saunde]

Everyone I talk to (Banks)wants 20% down for me to borrow the $$$ for this deal. I do not want to put that kind of $$$ up front.

Any suggestions???

Rug

Rug, Not to state the obvious But....

You should have your financing in place before you buy to avoid any surprises like this.

That being said, try another lender, another investor that may want to partner with you, Hard money. The other thing you can try is to get either a secured or unsecured line of credit. For such a small amount of money you require it may be your best option.

Keith

[brianb_cobbres]

Everyone I talk to (Banks)wants 20% down for me to borrow the $$$ for this deal. I do not want to put that kind of $$$ up front.

Any suggestions???

Rug



Going to have a problem getting a loan for less than 50K?

[ThreeRiversREI]

Going to have a problem getting a loan for less than 50K?

In PA, probably. My understanding of the state usury law is that interest is limited to 6% for loans up to $50k. That loan of $50,001, though? Max interest rate is 25%.

Most banks, credit unions, pawn brokers, etc. are exempt from the general usury statute and are covered under other laws. However, loans that small generally aren't worth the bother to them. I wouldn't expect most private money to have the license/charter necessary for an exemption and so probably wouldn't be interested in such small amounts either.

I know Countrywide has written loans that small in Pittsburgh, but I don't know if they still are or what the terms would be. Your best bet might be to get an equity partner lined up QUICK. Maybe someone at ACRE tonight can give you a hand on that score, or even on the 20%.

[rughead64]

Appreciate the help. I actually have a broker in mind that can probably help me. Just didn't want to pay the fees. I have one other option that I will look into in the AM. Thanks for the input

Rug