Looking to buy 3 family home that is foreclosed, need some advice

[newtothis]

Hello,

I am looking at this property 3 family:

$250,000 asking
its foreclosed
It needs new electric box, some new pipes, little painting and touch up, whole new bathroom, and 3 gas heaters.
it also has been winterized.

I am estimating for all the repairs to be around 20k.

My big question, is inspection. What city might want to see in order for me to be able to let people to live there.

Anyone had any experience in buying 3 family to fix and rent out ?

Thank you

 

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[458]

What are the comps selling for?

 

[Rickson9]

Perhaps you could ask the city?

 

[randallg99]

Hello,

I am looking at this property 3 family:

$250,000 asking
its foreclosed
It needs new electric box, some new pipes, little painting and touch up, whole new bathroom, and 3 gas heaters.
it also has been winterized.

I am estimating for all the repairs to be around 20k.

My big question, is inspection. What city might want to see in order for me to be able to let people to live there.

Anyone had any experience in buying 3 family to fix and rent out ?

Thank you

1. what is cap rate on property?
2. are you financing the purchase?
3. if yes, what are terms/rates?
4. are you able to get the pipes working before purchase?
5. did you get quotes from contractors to do the repairs?
6. are the heaters working?
7. have you spoken with housing authority/inspectors where property is located so you can find out what's needed?
8. is this property once a single family home converted to a multifamily?

I've bought several properties and have a couple under contract due to settle in next few weeks. I've added to my portfolio in past several months & have several more under contract. Here's what I would want to know if I were in your shoes:

1. my cap rate level is mid teens. I have found after some of the negotiations that cap rates will move into the 20s. For a property in foreclosure that needs considerable work then you want to take rehab costs into consideration when figuring purchase price.

2 & 3. hard money loans are absolutely out of the question. If you're in the game for a profit, make sure the terms are very favorable. Use schedules and spreadsheets to get a handle on cash on cash returns. I want at very minimum 15% cash on cash return before taxes.

4. obvious reasons.

5. helps decision making process.

6. again, obvious reasons ....baseboards, vents, etc can all experience significant decay depending on amount of time they've been stagnant not to mention heaters themselves can be around 4k each

7. ask them and they'll tell you what's needed ... they may even disclose a little history about the property

8. I won't buy "makeshift" properties anymore. They've been troublesome.... I've had a few properties that were converted from single families into multifamily units and they present many challenges unnecessary to achieving ultimate goal of profit.

 

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[newtothis]

Thank you for your reply.

Some more information.

Its a standard 3 family house. I am looking to finance it and put down around 10%. rate probably 5.5/6%.

The rent for each unit probably would be around 1000$

The only problem with this, they go fast sometimes, there is not enough time to do a lot of homework before bidding.

I cant turn anything on to check, to fix everything would probably take 20-25k.

1) Does any one have any suggestions about how to make offers for foreclosed properties ?
2) What about buying, fixing and renting, any good websites, books or advices on how to get better at it ? (because i find some nice houses, that might need signification amount of work, and they scare me because i am not that familiar with rehabbing multifamily)

Thank you

 

[hakrjak]

Foreclosures do go quickly, so you've just got to figure out what you're willing to pay and don't sit around researching when you should be submitting your offer. With regards to houses that have the water and electric shut off -- Some of these deals you'll lose money on, but most you'll make money on. Suck it up, and get 'er done.

- Hakrjak

 

[MonTexan]

Check out this post for some answers to your questions. Specifically, I laid out the recipe for how I've purchased numerous bank-owned homes - often when I wasn't the highest bidder. Best of luck.

 

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[hatterasguy]

Takes a lot to rent, you need to know what your getting into. Is this a dump area that will require you to spend a lot of time on it? Or is it a nice middle class location?

Foreclosures in my experience are all far overvalued, because people sucked to much money out of the properties when times were good. It sounds like your 3 family may be a deal at $150k, $250k is probably about market.