I Have Set My Property Investment Sights Higher
After Passing On The Manufactured Compound, I Look Upward For My Next Move
Stats:
3BR 2BA - 2,496 sq ft
Built: 1976
Lot size: 0.92 acres
This is a foreclosure that has been on the market since January. It has some issues that prevent it from being eligible for a conventional loan.
- Mold in the central air ducts
- Gas line leak
- The pool pump is missing (probably has been stolen)
I was able to get a copy of the mold report. The estimate to fix it is $6,348.77.
Since it has these issues, they say cash only in the description. I believe that this place is the perfect candidate for an FHA 203(k) loan.
A 203K loan can be used if the property is to be used as a primary residence. As this home is in a highly desirable area of Tucson with good school zones, I have no problems living here a couple years to get my appreciation gains tax free. In America, if you live in a property for 2 out of the last 5 years, any profit you realize is 100% tax free up to $250,000 per individual ($500,000 for a married couple).
The current asking price is $305,000. I feel that this is way too high as the bank will not complete the required repairs. The average sale price for a distressed property is just 62% of the after repair value. In this case, the after repair value is $389,000. This means that the property should be selling around an average of $241,000.
Which was in my range of $240-260K eyeball estimate.
Previous Offers
I had been watching this property for some time because it has an amazing "garage." Perfect for my eBay use. Check out the pics further down this post.
My agent spoke to the other agent and was told that some offers had been thrown out for being too low. The bank that owns this is not local and is one of those mortgage aggregation companies. You know, they go and buy mortgages from other banks.
I seriously think they have no idea what this property will really sell for. That is why it is still on the market 6 months later.
I intend to use all my tricks to make them realize the true value since they will not fix the few issues preventing a conventional loan.
Property Pictures
Is that not THE perfect area to store and work on my eBay listings? To me, it is the absolute ideal place. A HUGE garage that is begging for shelves and a nice air conditioned office to list and then write Steemit posts.
I could easily buy pallets of store returns and have plenty of processing space and storage to do that type of work.
Conclusion
I have completed my application for the FHA 203(k) loan and the mortgage broker is saying everything looks excellent. Of course it is, I ran all the numbers myself beforehand.
If the owning bank is willing to be reasonable about the price of a distressed asset, I will buy it and have everything fixed for a few thousand dollars.
So if I can get them down to around $250,000 I can fix it for a few thousand more and have a property worth in the upper $300's. Instant equity of around $100K.
I already hear the bitching though. It seems no one knows the rules of a 203(k) mortgage. I asked around the office, one broker said he did one 203k in the 17 years he has been a broker. I will have to educate them.
It's silly that a rookie like me knows more about these things than people who work in the industry.
Maybe I should resell on eBay AND be a real estate agent specializing in getting people into homes using all available methods. Hmm...
P.S. Anyone want to use the Zillow link and run some comps? I think a crowd sourced effort would yield excellent results.
203ks used to be real popular in the last bubble. Haven’t heard much about them since 08
Yes, sadly anyone who does any research knows as much or more than 90% of the agents and brokers out there. I'm probably gonna suck it up and take the real estate agent exam so I can handle stuff myself rather than pay others to do their job for them. I've been disappointed with every agent I've used :-(
That house is a spacious and a nice compound for sure. Since you are buying it to reside in then numbers are fine, that ability to create equity is huge.
Those 203k loans are a pain in the butt to get done, but its possible and if there is anyone I know who can burrow through the process it is you.
Thanks man, any personal experience with the 203(k)?
Nah, I looked into it at one point but did not end up pursuing the property I would have used it on. All I know is it is a bitch and you need to use approved contractors from what I recall, which means you are getting no good deals or discounts on work , just make sure your reno budget is not conservative.
That's not a garage, that's a whole warehouse, it will surelly make your ebaying a lot easier! You might need to get a forklift for that warehouse !
Haha, maybe a ladder or two...
That looks like the perfect house for you @getonthetrain and, as you say, that really is a warehouse storage type garage.
Good luck with your FHA 203(k) loan.
That would so brilliant if you got it. 😁
Money would be tight for a while, but I think it would be worth it.
@getonthetrain Always Make Sure you NEVER let them know you are Excited..................
Oh, I intend to down talk the property.
I would love to have that garage space! Hope you get this one or something even better. :)
I dunno if there is much better than this on a residential property!
Good luck with your property hunt and investment. This is quite a big place - with swimming pool too. Looks nice from the outside. No doubt still lots of work to be done. Hope all goes well.
Ductwork of newer houses is just this accordion plastic stuff. Just rip all the old stuff out, zip tie, duct tape the new stuff in, and viola.
Pool pumps, although expensive are freakin easy.
The gas line will probably be the hardest, and... the cheapest, or the most expensive. Finding the leak is the pain, as it usually require digging (sometimes under the house, where it is not supposed to be...)
But, yeah, that is a nice garage. If i wanted to live in Tucson, i would totally go for it.
Probably all the flippers are saying its too pricey, so have passed.
Good luck.
@getonthetrain, This is breathtaking place for sure and after watching that garage i remembered the game called Grand Theft Auto San Andreas.
And interior is huge and eye-catching, and in my opinion there is place for everything whatever comes in our mind, this means you can restructure anything you want.
And yes, sometimes who call themselves as experts, never follow the basics and they make overall process an game of confusion instead following basics and making everything simplistic.
Good luck and i wish and hope that you've got what you were looking for. Stay blessed. 🙂