yes (and thanks for asking
i may have an opportunity to buy an older home, in relatively poor condition, that is very close to my home. (the elderly lady who owns the home has now moved back to the midwest to live with her sister, leaving the house vacant. i'm in contact with her sister, who is in the process of becoming conservator of her sister.) i'm thinking of using (1) using this as a rental and / or (2) turning it quickly / over a period of time as a scraper.
what 3 things should i be aware of before making an offer for this property? i'm thinking along the lines of past-due taxes, mortgages, liens, etc, but would appreciate specifics you would suggest.
i realize you've got a full life goin', steve, so answer as you have time.
thx,
hal
Look at comparable that are in the same condition as the house is currently in. Then offer 20% less than the comparable price.
Look at houses that are comparable which are repaired and ready to go. Then be ready to list your house repaired for 20% less.
Get competitive bids for repairs. Add 20% to the highest one and expect to pay that amount. Add that amount to the price you are paying for the property then subtract 20%. If you don't come out with the right number walk away. No sense in spending time and not making money.
If you lost money in the market last year you can flip the house and offset the gains against the losses in the market as long as no one lives in the house and you don't rent it. This is per my accountant.
Use an attorney, they are cheap compared to the cost of not using one.
If you are concerned then buy title insurance. It's relatively inexpensive compared to what problems with the title will cost.
Here is a horrible story.
My friend is Cambodian. He saw what I was doing with RE and thought he would like to try it himself. He is a factory employee.
He bought a house at county auction. His own home is paid in full. He got a HELOC on his own home. Paid for the run down place, but with a great location next to Cornell on the golf course. He goes in and starts to look the place over. He paid 150k and IMO the place needs 100k in work. No biggie as the place is probably worth 450k if I fixed it up. He has me come over and check the place out. I give him a bid to fix it up. HE is cleaning the place out separating all the trash, metal, new papers, etc. This place is STACKED with junk form 100 years ago, no joke. Well I tell him that's his first mistake. Just get some huge dumpsters in there and load them up FAST. He screws around for weeks cleaning the place out wasting 3 months, three months of carry cost that are more than 3-4 dumpsters would have been.
So he decides he is going to do the work himself. I guess my 100k bid was too high, I though it was a damn good deal. He rips the roof off. The police show up. The county didn't take the house back properly for back taxes. He is arrested and sued for taking the roof off and throwing out all the crap in the house AND has no proof of what was there as he didn't take any photos.
He doesn't speak very good English so the system has a bunch of fun with him. He goes to jail. Has a record. He is now fighting it but can't set foot back on the property or he will be arrested again. He has to continue to make the payments or he will lose his own home. He is screwed.
To top it off, he just got laid off at work last month.
Know what you are getting into and what the hell you are doing before you do it.
