I Need HELP On A Real Life Assignment Deal In The Making
I have a deal in the making here.
One question I have to get out of the way first... The total square footage of the lot is 6,000, yet all the comps in the area are from 3-6 months ago and have lot square footage of 11,000. Also, this home was built in the 50's and the comp homes were built in the 80's. My question is, How would I factor these numbers into determining the Fair Market Value of the home I am offering on?
Home specs:
5 total roooms, 3 bed, 1 ba in Bay Area, California, 1950 sq ft lot, house is 900 sq ft.
One comp has 6 total rooms, 3 bed, 1 ba with a smaller lot size but a bigger home size. (How would I factor that in as well in determining the home's Fair Market Value?)
It sold 3 months ago for $475K
Here is what i was thinking...
Assuming this house has a Fair Market Value of $400K, which I can determine later through an Appraiser/Home Inspector, and needs $50K for curb appeal and new paint, I'll offer 30% of as-is value($350K), which would be approx.
$262K. If I were to assign it for $15K, the buying investor could put $50K into the house and have $63K in equity, not the mention the market value rising a few percentage points from time it takes to fix up the property.
This is, of course, assuming that the property does NOT require more than $50K in repairs, but if it did, I would attempt to renegotiate.
How does all this sound?
$50k is an awful lot of rehab, not something I would call curb appeal, what needs to be done to it?
[addsig]
Well, since I haven't had an appraiser or inspector in to look at it yet, this is all up in the air, so to speak. In California, $50K for rehabs is actually low.
What is needed
Brand new yard lanscaping
Completely New Fence
House to be Painted
Possibly a New Roof
And the rest set aside for any problems threr might be inside.
Is $60+K enough for an investor to be interested? If I had the cash and these numbers were made true, I'd fefinately be interested in making that much money within 2-3 months or even if it took me a whole year. Making $60K in a year would be ok with me!
So properties AND materials are way more expensive in california? Wow, glad I'm in Florida.
[addsig]
50k sounds like alot for fixing up the curb appeal. I did a house in san diego it was a probate sale. It had been sitting for a year. the naborhood kids had turned it into a coloring book inside and out. I complete gutted it down to the wall studs, re-roofed it, put all new appliances in, new carpet in the bed rooms, tile through out the rest of the house, new cabinets, new bathroom. added a sun room, tore out all the landscaping had it leaveled out, sod put down, flower beds intsalled, and anything else to you could think of and it only cost me about 20,000.00 take into consideration that I did the tile myself, the paint, carpet, and bathroom, and put up a privacy fence. I hired someone to do the drywall, roof, landscaping, and cabinets, and to build a sun room. If i had to estimate it I would say that what i did saved me about 10k to 15k tops. I had all this done and the property sold before the 1st mortgage payment was due. All while working full time in the navy. So if your capable of doing some of the painting and interior work yourself you could save yourself some money. Even if you contract it all out all of these repairs shouldnt run 50k
I have some construction experience so this might help you out. judging by the 900 sq ft of the house the roof shouldn't run you more the 2-4k, moderate-good landscaping 10k, a nice privacy fence on 3 sides of property 1.5k, interior paint 3-5k, and 2k for the exterior. on the high side it would be about 22k all togeather. then leave yourself about 10k for the differnces in actuall estimated cost and your looking at no more then 30-32k to have this house in nice shape and ready for the market. With out looking at it and what you have described this is just a rough educated guess. And any work you can do your self will save you contractors fees. which is goods savings.
Ok, thank you for the input. Reguardless of how much it costs to fix up, do you think about a property with $60K, or, since it may only cost $40K to repair, $70k equity, would be an investment of interest to Bay Area investors?
Or anywhere for that matter.
I guess my real question is, should I offer lower, so my potential investor will have more equity, or if I can't, would this be a nice pickup?
Again, I am only looking to assign this property.
Thanks again
Bay area market is very hot right now, they have about 7 to 10 offers on a house, what makes you think the owner will take 30% of off the FMV? Even fixer uppers will go with multiple offers if priced right. Well, if you can get it for that price, you can assign it to me.
Natalie.
Not all owners in the Bay Area are in situations where they have time, or knowledge for that matter, to sit back, call a realtor, take offers, etc. Especially when living out of state.
Yes, indeed, the Bay Area is hot now, and the problem I run into most of all is that the owner doesn't mind continuing to rent, and the owner in default prefers bankruptcy.
How far below market value have you offered and how far under market value is usually accepted?
Quote:
On 2004-12-17 21:55, aceinquiries wrote:
Not all owners in the Bay Area are in situations where they have time, or knowledge for that matter, to sit back, call a realtor, take offers, etc. Especially when living out of state.
Yes, indeed, the Bay Area is hot now, and the problem I run into most of all is that the owner doesn't mind continuing to rent, and the owner in default prefers bankruptcy.
How far below market value have you offered and how far under market value is usually accepted?
Yes, you are right there are all kind of owners in all kinds of situations, and my offer still stands, if your offer gets accepted, let me know.
As far as your question about how far below have we offered and what is usually accepted, that is hard to say, each situation is very different.
I was more curious about your "on average" below market value accepted.
Thanks
Quote:
On 2004-12-17 18:40, ray_higdon wrote:
So properties AND materials are way more expensive in california? Wow, glad I'm in Florida.
I think $50,000 rehab would not be so hard to imagine the total sq footage is 6,000 sq feet.
[addsig]