December 2, 2011 in Investing In Real Estate
I looked at a house yesterday that we will call the “apartment house”. It is in an area that I have had great success wholesaling property to other real estate investors. This home is in a typical lower income blue collar neighborhood of mostly 2 bedroom homes. I really don’t like to buy houses that have less than 3 bedrooms because they can be harder to sell. But in this area, these homes are typically 2 bedrooms and are less than 1000 square feet. This house has vinyl siding which is also typical for the area. So if it’s a good deal, I will buy those small 2 bedroom houses.
So what’s the problem?
This house is near the end of the street which is 3 blocks long, and it is 7 or 8 houses from a court that has apartment buildings. That is the problem.
These apartments have been a fixture in the neighborhood for probably 50 years, and the folks that live on this street obviously don’t mind. But I am pretty sure that this house will be a little bit harder to sell.
What are the good points about this house?
This is a small house at about 800 square feet but it has some extras:
-It has a full basement that is already divided up into 3 rooms. One of those rooms has a massive wood bar. There’s nothing else; no flooring or finished walls, but there’s almost surely been a party here. Putting up some drywall to finish at least the room with the bar, will add value and will be attractive to potential tenants.
-There is a laundry room in the basement.
-The house has a one car detached garage. Not many of the houses on this street have a garage.
-The house has hardwood floors throughout.
-There are appliances that look like they are in good shape.
A landlord could rent this house without a lot of repairs being needed immediately.
What does it need?
-The house needs a good power washing.
-There is a carport attached to the front of the garage that is in bad shape the needs to be removed.
-The furnace is working well, but it is old and will surely need to be replaced in the future. Also there is no central air. Adding this could tip the scales to entice a buyer to buy this home. I have found that just about everyone, no matter what the level of the house they are looking at, wants central air.
-The windows are older and will need to be upgraded at some point.
Time to make a decision
One part of me is saying “Just let it go” because of the apartments. But another part is saying “Hey there is money to be made here; you just might have to work a little harder to get it”.
Since this house will be harder to sell, I’m going to make a low offer that is contingent on partner approval. So who is my partner? My partner is the investor that ultimately puts up the money to buy this wholesale deal from me. I am going to be upfront about the fact that I need a money partner to pay cash for the house.
Just how motivated are the sellers?
Well, I’m about to find out.
This house is listed, and the call actually came from the Realtor. The executor of this estate received one of my letters and passed it on to her. The Realtor says they are motivated sellers, and has encouraged me to make an offer. So that’s what I am going to do. But I’m going to make that offer by taking into account the effect those apartments might have on my ability to wholesale the house quickly to another investor.
There are a lot of real estate investors in my area that love that area for rental property. I’m sure there is someone that will buy this house from me IF it is at the right price.