What to do, what to do

[Lights]

There's this 2029 sq feet home I'm looking at, love the house, but it needs minor repair but nothing more than say 3k total I imagine. 3 bedrooms, 1 bathroom. Nice neighborhood, but in a low-income city, but in a college area. Tons of colleges in a 1-2 mile radius like Kettering, U of M, community.The house cost 6k.

So I want to fix the house up a bit, and then rent it out to college students.

I told my family, and now my mother is like, "I have a place to stay when I come over from Utah. We could live there together and make it nice", and my brother is like, "I can live there and get away from my dad's place".... and I'm like wtf mentally. I need the money obviously lol, and I'm not here to make a soup kitchen.

I'm seeing the broker tomorrow.

 

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[Vigilante]

There's this 2029 sq feet home I'm looking at, love the house, but it needs minor repair but nothing more than say 3k total I imagine. 3 bedrooms, 1 bathroom. Nice neighborhood, but in a low-income city, but in a college area. Tons of colleges in a 1-2 mile radius like Kettering, U of M, community.The house cost 6k.

So I want to fix the house up a bit, and then rent it out to college students.

I told my family, and now my mother is like, "I have a place to stay when I come over from Utah. We could live there together and make it nice", and my brother is like, "I can live there and get away from my dad's place".... and I'm like wtf mentally. I need the money obviously lol, and I'm not here to make a soup kitchen out of my home for free. I'm not planning to live here.

I'm seeing the broker tomorrow.

Don't miss business and family. Period.

 

[Lights]

Don't miss business and family. Period.

I know. Yeah, I just got to put the rule down about it.

 

[wade1mil]

Nice! My first thought...

If you are going to rent it to college students, you're probably going to want more than one bathroom. I'd convert one of the bedrooms into a bathroom and make it a 2/2. Then you have two students renting and each of them get a bathroom, rather than three renting and sharing one. If you can, convert the middle bedroom so the rooms are on opposite sides of the house for privacy. That should increase your rent.

 

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[Lights]

Nice! My first thought...

If you are going to rent it to college students, you're going to need more than one bathroom. I'd convert one of the bedrooms into a bathroom and make it a 2/2. Then you have two students renting and each of them get a bathroom, rather than three renting and sharing one. If you can, convert the middle bedroom so the rooms are on opposite sides of the house for privacy. That should increase your rent.

Good idea. I'll look at what I can do tomorrow, there's 6 rooms in total, so I could convert one useless room into a bathroom.

 

[1PercentStreet]

needs minor repair but nothing more than say 3k total I imagine.

Change that to 10k. Anything you "estimate", just to be safe, multiply by 2-3x. Get it inspected first.

Is it $6000? How?

 

[Lights]

Change that to 10k. Anything you "estimate", just to be safe, multiply by 2-3x. Get it inspected first.

Is it $6000? How?

I don't have 10 k to pay for repairs, if it's more than that, then I'll reconsider buying it. I probably won't do it lol. The only reason why I am looking at it is because it looks great based on the pictures, and I'm taking some family who know more about repairs then I do with me. I check it out onsite today, but it looks nice but I don't know until I'm inside.

6 k, house foreclosure.

 

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[Lights]

If things look good, I'm going for it. 6 k for a house like that. No way am I going to find a better deal. I need to put some experience under my belt, and the only way I'm going to have that done is through action.

 

[InLikeFlint]

Renting a house near U of M is a wonderful idea, my friend and I have been looking into it.

Here is why:

- The house is for a bunch of college students so it will hardly ever need to be painted or re-done or refurnished because they will trash it

- U of M will be around for centuries, pay the initial fees, and within a few years you have established a residual income

My friends brother lives quite a way off the U of M campus in separate living, and I want to say he was paying like $300-500 a month for the housing, quite a hefty chunk of change if you have 2 people paying monthly for years to come, you can expand to more houses too.

In my opinion, go for it.

 

[21elnegocio]

If things look good, I'm going for it. 6 k for a house like that. No way am I going to find a better deal. I need to put some experience under my belt, and the only way I'm going to have that done is through action.

I say go for it man even if it needs repairs like painting, switching out door knobs, and a good clean up I mean go for it like you said you need some experience under your belt. Shoot if I saw that opportunity I would buy it and get some experience. Just dont tell your family man you should of kept quite until they found out, or until you had tenants that way they wont try to go live there lol

 

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[21elnegocio]

By the way where do you go to find good deals like this ?

 

[wade1mil]

By the way where do you go to find good deals like this ?

MLS and the public records. There are a couple of states that keep it private though, not sure if MA is one of them.

Lights, if $10k in repairs is too much for you and it's still a good deal, find a cash partner. No reason to throw away a good deal because you can't come up with another $5k.

 

[1PercentStreet]

MLS and the public records. There are a couple of states that keep it private though, not sure if MA is one of them.

Lights, if $10k in repairs is too much for you and it's still a good deal, find a cash partner. No reason to throw away a good deal because you can't come up with another $5k.

What do you think about the estimates of $3k?
I know from personal experience that anything I guessed on, it was not conservative and spent a lot more then I wanted to.

 

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[wade1mil]

What do you think about the estimates of $3k?
I know from personal experience that anything I guessed on, it was not conservative and spent a lot more then I wanted to.

I couldn't tell you without seeing the house. The problem with arbitrarily doubling your estimates it that it can turn a deal into a non-deal. Plus, what works for you may not work for her. I guess the best thing to do for someone doing it for the first few times is have an actual estimate done by a contractor. But since it's a foreclosure, she'll have to pay that even if she ends up not buying the house.

 

[1PercentStreet]

I couldn't tell you without seeing the house. The problem with arbitrarily doubling your estimates it that it can turn a deal into a non-deal. Plus, what works for you may not work for her. I guess the best thing to do for someone doing it for the first few times is have an actual estimate done by a contractor. But since it's a foreclosure, she'll have to pay that even if she ends up not buying the house.

Great idea and might be worth the costs.

 

[Astute]

Nice! My first thought...

If you are going to rent it to college students, you're going to need more than one bathroom. I'd convert one of the bedrooms into a bathroom and make it a 2/2. Then you have two students renting and each of them get a bathroom, rather than three renting and sharing one. If you can, convert the middle bedroom so the rooms are on opposite sides of the house for privacy. That should increase your rent.

I don't know about the States, but here in the UK most students aren't used to luxury.

These are students who will want to pay the best prices for their rooms. Sharing the risk over 3 people, rather than 2 at a higher rate, would be more sensible than hiking the rent up for 2 people and losing income from a 3rd bedroom. You also have the additional costs of putting a 2nd bathroom in.

If there is a possibility maybe it will be worth OP considering putting an additional toilet somewhere, but to create a whole new bathroom with a shower etc is needless.

 

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[Virtualgal]

6k for a house? Wow. I just stumbled upon this thread and it has taught me a valuable lesson.

I had absolutely no idea you could conceivably buy 'decent' houses for anywhere near this range, heck, even several times this, foreclosures or not.

It's just made me realize how tuned in I get to what I 'think' is possible/realistic -when other people are out there doing the very things I would never think possible....

Best of luck with the house deal, and thank you for this thread.

 

[Gsuz]

6k for a house is crazy. Where I live, you pay around 80k for a 500 sq feet flat in a low income area that looks like shit. I'd go for it.

 

[nzerinto]

I'm blown away by this. $6k for a house?! Are you kidding me? I come from a place where my only reference point is that you USE TO be able to get a house in the $120-150k range (ie in the 70s and 80s), but nowadays expect to start looking from $300k.

I obviously have a lot to learn in this regard.

Sorry to semi hijack the thread, but even as a foreclosure, what would a regular property investor expect to find for this type of house? What would the condition generally be like - holes in the walls? Moldy carpet? Previously used as a drug house? Bad neighborhood? (Because that's all I can imagine at that price point - forgive the stereotypes!)

I simply can't conceive that a standard person's few months salary would be sufficient to pay off the entire mortgage.

Mind blown.

(If someone could point me to a good starting point (book or website etc) to find out more about this, and how as a non American I might be able to capitalize on this I'd really appreciate it)

 

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[LamboMP]

nzerinto,

I know. It's crazy isn't it. The US market is completely different from Canada. You can't even get a good semi for under 350K LOL

 

[MMatt]

I'm no real estate expert but when I see house and 6k in the same sentence if it's in one piece and not in the hood that would probably be a deal maker for me. In my browsing the best I've come across in my area are 10-20k for a trailer and 50-70k for a house needing much work.

However, on the repair estimates, if you are not doing the work yourself 3k is a very conservative estimate. Contractors are pricy. If you were looking to redo one room you're talking thousands already.

 

[wade1mil]

Houses for $6k don't exist everywhere. Back in 2009 there were entire blocks of houses selling for $300-2k in Detroit. Vegas had quite a few for a few grand also. In the area I lived at that time, the cheapest house on the MLS was something like $80k.

 

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[CEBenz]

And everyone left one detail out..... DO NOT tell the family you bought it. Tell them someone else beat you to it. Lol

 

[CEBenz]

Unless of course they will reliably pay you rent

 

[GuestUser8117]

Here's an advice. Don't put all your savings in a real estate investment. Even if you don't want to "invest" in real estate, it is an investment. I think you said you live with your brother right? Maybe he could help you buy the house with his money. Sort of creative financing. And a plus : The tenants will pay the mortgage faster

 

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[Guest3722A]

FWIW I can find lots of houses for less than 10K in the metro-detroit area. They're out there. You just gotta know the area.

 

[Lights]

Here's an advice. Don't put all your savings in a real estate investment. Even if you don't want to "invest" in real estate, it is an investment. I think you said you live with your brother right? Maybe he could help you buy the house with his money. Sort of creative financing. And a plus : The tenants will pay the mortgage faster

Thanks. He has no money, especially right now. But I have enough to pay for it. There is no point giving up on an opportunity just to play it safe.

I look at the place yesterday, and it seems like there's hardly any repairs. Could be plumbing problems, but otherwise nothing else needs to be fixed. I can get it up to code easily. I bid for it, and I should find out by Wednesday if it's mine. Then I'm going to start repairing the place, painting the walls. I know some people who can help me with that, and I have the equipment.

I can find renters too, since I know a lot of college students who need a place, and they will rent this place out no problem because it's close to the colleges. huge rooms, huge living room, huge basement. I can see a lot of parties happening.

 

[danoodle]

This sounds like a great way to get started, especially at this price point. Sometimes the best way to get started is just to get your hands dirty. I would check the big ticket items: roof, furnace/ac, plumbing, electrical, so you can estimate when you will need to fix/replace these things. I just bought a house for $6200, but it will require around 10k in repairs and a couple hundred hours of my life fixing it up.

I disagree with wade on converting a bedroom to a bath and say "it depends on the numbers". The way most college rentals work is per room. So 3 bed/1 bath might rent for $300 a room to make $900/mo. If you made it 2 bed/2 bath, could you rent each room for $450+ to make it worthwhile? You also have to figure in the cost to put in the new bathroom as well depending on if you do it yourself, could range 3-5k+. You just have to add up the numbers to see if it is worth it. 3 kids for 1 bath is pretty common around here, I'd say 4/1 is pushing it. I have a college rental 5bed/2bath and they are fine with that.

I also agree with an earlier poster about having cash reserves. I am learning the hard way about acquiring too many properties and not having a big enough cash reserve. Things will go wrong. I am currently facing a 10k+ bill to replace 3 complete HVAC systems.

I have a lot of experience with these "cheap-o houses" and they are a great way to get started.

 

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[CashFlowDepot]

Better check the zoning laws in that area to make sure you can rent it out and find out if there is an occupancy limit.

Many areas limit the number of people that can live in a house based on the # of bathrooms.

This is a HUD property. That means they priced it really low hoping to get a lot of bids, then sell to the highest bidder. So the $6k starting bid may not be where it ends up.

If you get the contract, put in a 7 day inspection clause. Then get a professional inspector over to the house to check it out from top to bottom. Get the utilities turned on the day of the inspection. That is the only way you can really know what works and what doesn't.

You may find hidden defects that will kill the deal (water damage, termites, HVAC system does not work, etc ) And you may find minor defects you can use to negotiate a lower price.

Until you have a lot of experience, always get a 7 day option ( weasel clause) and get the house inspected during that time.

 

[21elnegocio]

MLS and the public records. There are a couple of states that keep it private though, not sure if MA is one of them.

Lights, if $10k in repairs is too much for you and it's still a good deal, find a cash partner. No reason to throw away a good deal because you can't come up with another $5k.

Thanks man, ok well MLS is MLS.com - MLS Listings, Real Estate Property Listings, Homes for Sale but where is Public Records ? website ? any other places to find deals ?