Fri, Jul 03, 2009
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Bank Owned/Duplex/Low Price/Needs Works |
KenM
7 Posts
Member Since: 03/11/2004
Concord, CA
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Posted: 14:09 on 10-08-2008
Hello,
I have just found a Duplex in Northern California, it is Bank Owned, at a Cash Flow Price. But needs alot of work, All Appliances & Fixturs, Copper plumbing, Carpet, Paint w Prep. My guess $15k to $25k for rehap costs and this still cash flows-very good.
I am throwing this out to get feed back from you, I appricate and warrant your opinions & experience.
Thanks
Ken
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rglover548
450 Posts
Member Since: 06/20/2005
New Orleans, LA
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Posted: 16:01 on 10-08-2008
Those are the best kind. You can often get the bank or seller to reduce the price by 50k on a property that only needs 20k worth of repairs. Looks like it should work, duplexes/multifamily props make better rental to me anyway.
Good luck
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Stockpro99
2170 Posts
Member Since: 07/01/2003
Salt Lake City, UT
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Posted: 17:27 on 12-17-2008
Not sure what your looking at but I would plan on the higher end for repairs and get an estimate.
I am a pro and have hundreds of rehabs under my belt but still end up making mistakes or missing things when I go too fast and don't run hard numbers//
_________________
"Chance favors the prepared mind"
Randall Wall
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finniganps
2122 Posts
Member Since: 07/25/2005
Walnut Creek, CA
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Posted: 19:18 on 12-17-2008
Ken,
I live right next to you and have looked at similar properties. When they are bank owned and priced well, I have found they are going for more than asking because other investors are bidding them up unless they are in cahllenging areas or have a lot of rehab. I had a SFH that was 40-50% under market for the listing price. I heard about it late and talked to my realtor who informed me that there were 15 bidders and that they were within 10% of market. The bank wasn't allowing inspection contingencies. When it's that close to market, I'm leary of bidding in a dropping market. I hope the place you're interested in doesn't attract a bunch of bidders.
With regards to your estimates, I haven't seen the place you're looking at, but I think $15-25k is optimisitc for the rehab you're talking about unless you are doing most of the physical labor or have a lot of existing relationships with the tradespeople. I had an electrician give me a bid (that I've used before) and he wanted over $150/hr for the work (it did not involve crawl spaces or anything out of the ordinary) . A couple months later he has called back and has lowered his price to just over $100/hr., but I doubt you can get what you want done for those prices in our area if you're using licensed contractors. Hopefully you can get a contractor to come out and look at the place and give you an estimate. Since you don't own it - I'd definately pay him for his time. Good luck!
[ Edited by finniganps on Date 12/17/2008 ]
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loon
1167 Posts
Member Since: 03/27/2003
Duluth, MN
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Posted: 08:51 on 12-18-2008
Fixers are fun, esp. once their DOM gets long and the bank has no offers. From the sounds of your area, though, you may not have much bargaining power, but it's worth considering at least. One way I've seen is to use a friend (or another of your companies) make a super-low offer--like 30% of asking--to set the stage and make your real offer look better. Again, this presumes there's not much interest in the property.
Tell your contractor--and Finni's right, pay for their time, credited if hired--and tell them you want a detailed laundry list of repairs. Also tell them you want no expense spared, best carpet, paint, insulation, etc. Add a substantial percentage for "administration and oversight of rehab." Then submit it with your (low) offer as rationalization. I do this with Short Sale offers (when I submit a full package) and it seems to help sway them.
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cjmazur
4284 Posts
Member Since: 07/23/2003
Cupertino, CA
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Posted: 15:46 on 12-18-2008
I have ran into having different expectations with partner/investor, as to what is an approprite amount of rehab.
We looked at a place, and he said it was in "move in condition". I felt it needed ATLEAST 25-30K. On a 100K property, that's a huge different.
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KenM
7 Posts
Member Since: 03/11/2004
Concord, CA
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Posted: 01:09 on 12-21-2008
Wow Great advice from all of you, Thank You very much.
The update is: I bought this Duplex for just under $110,000, I have spent $4,000 on plumbing, $1,350 on electrical, $400 on general clean up, $250 on fixtures, etc., a friend gave me a gas oven.
Still need to paint interior about $100(I will do), refrigerator $400 max, carpet $800.
Perhaps more to be revealed. I have a tenant & plan on moving them in January 1st.
Ken
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