Should I Do This?
OK. I am concidering buying a house that needs considerable work. Its curently a double that i would want to convert to a single (not that hard to do with this house). Its 2300 sqft, assessed at $84,500, built in 1900. Its in the neighborhood i want to be in. There is a new roof on 95% of the house. The foundation is fine.
The seller wants to get rid of it fast. his sister (slob) has been renting it from him since he baught a new house like 8 years ago. He hasnt maintained it because the plan was for her to buy it but she had to move with her father to take care of him.
He is not willing to do much to sell it.
I would plan on living in the upstairs half (which has be mostly remodled - painted, floors done, rewired), while i rehab the lower floor. The loweer half is where the slob lived - cat smell, ceiling tiles damaged from water bed upstairs at one point, and i assume it needs to be rewired.
My first idea is to basicly gut the downstairs and do as much of the work as i can myself with friends.
My question is...does this sound feisable? How much would i offer to pay for the house for this to be worth it? Also...He may finance or lease/purchase for me because of my credit issues. Is there any advice?
landm:
I need a little more information. What do comparable houses in that area, fixed up, sell for? Do you have cash available for the repairs? I would estimate, given that you are doing the work yourself, it may cost about $10-12,000.
It's great that he is willing to finance it. That's awesome, the kind of thing we look for. How much would he want down? Would he want a 15 year loan, or is he okay with 30? At 30, it is very feasable because your payments will not be much to worry about. At 15 at say, 7% you are looking at about $700/mo, at 30 @ 7% it's more like $530.00. Personally I prefer 15 year loans, mainly because I hate interest. But if you think you may not be keeping the home forever, then go for the lower payments and save yourself that 150/month.
Also in your favor: he has admitted he wants to sell fast. Throw him a lowball offer. See what he says. He can say no, and you can come back with a better offer, from there he may negotiate.
Quote:
On 2004-12-01 14:18, landm wrote:
OK. I am concidering buying a house that needs considerable work. Its curently a double that i would want to convert to a single (not that hard to do with this house). Its 2300 sqft, assessed at $84,500, built in 1900. Its in the neighborhood i want to be in. There is a new roof on 95% of the house. The foundation is fine.
The seller wants to get rid of it fast. his sister (slob) has been renting it from him since he baught a new house like 8 years ago. He hasnt maintained it because the plan was for her to buy it but she had to move with her father to take care of him.
He is not willing to do much to sell it.
I would plan on living in the upstairs half (which has be mostly remodled - painted, floors done, rewired), while i rehab the lower floor. The loweer half is where the slob lived - cat smell, ceiling tiles damaged from water bed upstairs at one point, and i assume it needs to be rewired.
My first idea is to basicly gut the downstairs and do as much of the work as i can myself with friends.
My question is...does this sound feisable? How much would i offer to pay for the house for this to be worth it? Also...He may finance or lease/purchase for me because of my credit issues. Is there any advice?
im very familiar with the area. I friend of mine baught a house 2 doors down fo 85000... 5 years sold for 115000... something like that . house was in better shape though but about the same size.
Ill have some cash in a couple months, about 8000. Dont want to use much cash for the offer. I plan on staying in this house for a while. Should i try to finance myself even with credit issues or do the l/p or have him finance?
How low of an offer could i give.
Thanks
Also someone told me this but i dont quite understand the second part.
See if he is willing to do a lease/option. Ask for 12 months at a
reasonable rent figure. Have the lease note that you are given permission
to convert the property to a single and to do the work. Ask for 25% of
rent to go towards your down payment. Have the option extend out at least
12 months or perhaps 18 months if you need more time to clean up your
credit. Peg the option price
If the owner would finance it for me.
If he is willing to do it. Peg the price. The owner will
probably want some money down. Try for as little as possible. Have the
owner take back the mortgage based on a 30 year amortization but with a
balloon payment in say 5 years. That means that you would refinance in 5
years to pay the owner off. This would be better than lease/option if the
owner will go for it.
Make sure whatever you do, for your benefit, always make your payments to the landlord with a check, and make sure you get a copy, front and back, from your bank. That way when you go to purchase the home, you can verify mortgage with 6 months or 12 months of cancelled checks. Most lenders will not take a VOM from a private individual, unless you have high credit scores.
No offense, but " im very familiar with the area. I friend of mine baught a house 2 doors down fo 85000... 5 years sold for 115000... something like that . house was in better shape though but about the same size." does not make it sound like you are very familiar with the area. you had better know what the house is worth before you buy it. You might be getting a good deal and you might be played for a sucker. Just because a slob relative lived in the house and the owner is layed back, does not guarantee that you are getting it at market value or below market value. Many people have paid too much for a "fixer upper" only to learn that they could have taken their money and bought a house already fixed up.
I agree with brassnickel. You absolutely MUST do your research before jumping into any real estate deal. If this home is still appraising at about 85,000, and you think fixed up it may be worth about 115,000, that's really not going to be the best deal for you. Think figures - 115-85=30. Subrtract 10-12grand from that for your fix-ups, so less than 20. Now add mortgage payments for, 2 years, let's say, for 550/mo is 13,000. 20-13= 7. After you pay RE commission in the resell, you have made zilch.
I'd lowball for 60,000, maybe 65,000. Whatever you do, don't buy it at the 85,000 he wants.
Quote:
On 2004-12-01 16:25, bgrossnickle wrote:
No offense, but " im very familiar with the area. I friend of mine baught a house 2 doors down fo 85000... 5 years sold for 115000... something like that . house was in better shape though but about the same size." does not make it sound like you are very familiar with the area. you had better know what the house is worth before you buy it. You might be getting a good deal and you might be played for a sucker. Just because a slob relative lived in the house and the owner is layed back, does not guarantee that you are getting it at market value or below market value. Many people have paid too much for a "fixer upper" only to learn that they could have taken their money and bought a house already fixed up.
I wouldent buy it for anything close to appraisal. Im also planing on staying in the house for say 10 years.
Also Im concidering my credit issues here.
Also how do i find fair market value? I know the tax appraisal is 84500.
Tax appraisal value is entirely different from a FMV. My tax appraisal has my home valued at 40,000. It's worth 85,000.
You can have the home appraised, they can even tell you what it would be worth once the home was repaired.
If you are planning on living there for 10 years, then that makes a difference, as in 10 years it should appreciate nicely.
Thanks. I thought that info might make a difference. I also know i could get a nicer house for the same price but not 2300 sqft for my growing family.
Whats a ballpark for the apraiser and who should initiate it or pay for it?
Is it kind of like inspection and can they go hand-in--hand?