First Investment Opportunity
First of all, thanks to all the posters here, you provide GREAT knowledge for the rest of us!
I was just made privy to a deal here in MD. It is a waterfront property (4 BR, 2 FB, 2 HB) with a great view. It was originally listed at $899K, then dropped to $799K, then to $740K... Now the RE Agent called a friend of mine (who is also a RE Agent) to say that the seller would let it go for ~$650K ($250K off the original listing price!). He just wants to be done with it.
There is nothing major wrong with the property, two things I see that may be why it hasn't sold is there is a steep walk down to the water, and there is an old house next to it that needs to be renovated. To counter these 'problems', an 'incline trolley' could be put in (the next door house has one), and the house on the other side is AWESOME. Comps are $699K for two 2 BRs in the same area.
What do you think? Should I try to get the financing myself (this would be my first deal... scary...), or try to 'birddog' this to someone else?
Thanks for any recommendations!
-James in MD
Congrats on getting this far. I would confirm that the comps in the area are accurate. (You make RE when you buy, not when you sell.) The fact that the property was listed 250k more, doesn't matter. It could have been overpriced (though by your email that doesn't sound the case.) Of ourse, when you purchasse it, back into the number that you think that you will be able to sell the house for - after all the repairs.
Good luck and keep us posted.
Ideas for more info...
I would try to find out (through auditor) how much the owner paid for the property and how long ago. This might give a hint of what's going on. Have they only had it a year? Did they inherit it? Just how much equity do they have to give up, etc... Is Martha Stewart selling this?
Are the taxes about to go up because of city assessments (sewer, water, streets, etc...)? Zoning change in the works?
Get that pup appraised and get a good foundation inspector.
I don't mean to sound skeptical, but be careful. $250k less sounds fishy on the waterfront. Also, a first timer investing in $650k... seems like an aweful lot of money on the line!
Find out through agents or the local realty board how long it normally takes for those properties in the area to sell. 3 months, 6 months, a year? This will give you a realistic idea of how long you may be looking for re-sale.
Use your agent friend to find out if there were any offers on the property that did not go through. If yes, dig for the reasons. Bad inspection? Did it not appraise high enough for a bank to fund the asking price? (This might be difficult, but try anyway.)
Can it be rented? What is the going rent rates?
I don't mean to scare you, but dig deep for more info on this one (any property, really). The more you know, the more comfortable you will be with the decision.
Good luck to you...
OHhouse \ Realtor
[addsig]
Thanks for the tips, I'll ask why/if any other deals fell through.
Actually, the interesting part of this is that a hockey player used to own it (Capitals, here in ****Must Reach Freshman Investor status before posting URL's***.) and has moved on to bigger and better things, owns it outright and wants to get the cash for other ventures...
My friend (the agent) says that the two things I mentioned are the reasons he thinks it hasn't sold yet. I can fix one, but the other just has to wait! (the property on the other side).
I'm starting to lean toward passing this one on to another investor. I have ~$40K cash for repairs/holding costs, but a $650K mortgage would eat that up quick!
What do you think I should expect for a birddog fee for this?
Thank you for any replies!
James in MD
ya- I'd be interested in hearing anyone's opinion on bird dog fees for this as well....
I keep checking for someone to respond to him but haven't seen anything....
I'm pretty sure I'm going to get this under contract soon (probably tomorrow). Comps for the area are $889K (4br, 3fb, 1hb), $950 (3br, 3fb, 1hb), & $950 (3br, 3fb, 0hb). If I were to list this property it'd be for $899K (after putting in an incline elevator for the steps ~$40K). But I'd sell this to another investor for $775 right now (no improvements)...
I'm going to a RE meeting tonight and will try to find interested buyers... Any suggestions for how to do this? Do I bring the listing with me and all the info? I'm obviously not going to give out the address, but eventually they will need to see it. Do I sign a contract (stating that they won't bypass me and go to the seller) with them before showing?
Thanks for any help!
-James
Hmm, well I'm not getting a good feeling about this deal (I just don't have enough experience to know the hidden costs)... I'm sure it could go for $899 once I get this incline trolley in and fix up the deck a little (any waterfront home I'd want to live in would have a kicking deck...). Should I try to flip this to another investor for like $775 (instant $124K equity for them) and call it a day or go in myself (more risk) and make the extra $124K myself?
SCARY... :-|
I just can't let this one go, I told my wife that if I don't end up doing something on this deal that I can't look at the listing anymore because I'd be very depressed when I see this thing sold for $899K in 3 months!!! ..
The safe way would be to get an option that you can flip. No risk, no holding costs. Slimmer profits, but there will be other deals that come along. I'd make some money and flip it to someone and have them teach you a bit in the process.
Hey Wilson,
The # 1 rule in real estate is don't fall in love with a piece of property!!! This will get you in trouble faster then you can imagine. Think back to your first couple of girlfriends, and how they were so right for you then, and where are they now?Remember the crazy things you did because of them that you wouldn't consider now.
This piece of property may be a solid opportunity or it may turn into the ultimate horror show!For a first time project, personally I'd stay away unless you know you could carry this place for an extended period of time and pay to do the work as well. The summer is already half over and those waterfront properties aren't moving quite as quick going into the fall or winter.
This is just one mans opinion. I'd hate to see you get burned or soured on real estate because this one may be too big to start with.If it was me I'd just "Paper Trade" this one... I'd watch to see what eventually happens with it and learn from there. The education will be quite valuable.
Mike in NH
JF,
If I were you I would let an experienced individual handle it. Sign a contract with a given $ amount you want to get out of the deal and insist that he lets you work through the process to learn how it's done. If you do it right, you will come out with a win/win.
Best of luck
JR
Allright, so I've decided to try to get an option to purchase for this house. I've never done this before.. I can get an option to purchase reviewed by an attorney, but how do I go about getting the seller to agree to it?
Are these usually non exclusive? Of course I'd like to get an exclusive, but that's probably a pipe dream? Should I offer more than asking with the option to sweeten the deal for the seller? I have some ideas on how to sell this property, but have to do a simultaneous closing for it to work (don't have enough of my own money to do the deal myself).
OK, so once I have the option, how to I show people the house? Once they see it, how do I know they won't call the realtor and go behind my back for the lower cost deal? I'd be trying to sell at full price so the difference would be substantial...
Any experience in this area? Thoughts?
Thank you!