Is this deal too good to be true? Advice needed for 1st time Buyer

Scranton-Wilkes-Barre Metro
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Is this deal too good to be true? Advice needed for 1st time Buyer

Austin Mulhern
Member since 2022 · 4 posts · 2 votes

Been a long time lurker, first time poster. Just finally bought the PRO version so I can kickstart my a** into this deal. Need some advice on this.

My father is willing to sell me a home he bought for 47k cash in 2013 from a foreclosure. Its a 3 BR/2bath 1600sq/ft home in Nanticoke PA. Not the best area exactly for an appreciating market, but thats okay because if my math is correct here, this is too good to be true. He bought it hoping to rent it out but it ended up being too much work for him, and hes willing to sell it to me for what he bought it for. No hard feelings, I told him my plan, and hes totally on board. Here are the details:


Purchase price: $47,000 

Current Zillow Zestimate: $156,000

Average rent for the area with similar specs: 900-1300.

See my report here: https://www.biggerpockets.com/... (Yes, I'm aware I didnt fill out the variable expenses (vacancy, etc etc) but to be honest, if this thing doesnt rent out for 6 months, the 300$ mortgage payment is not a deal breaker to me)


Once I buy this thing, it seems that I'm immediately gaining tons of equity. My plan would be to put maybe 10-15k into it and get it in tip top shape, and rent it out for the next next 5+ years. I currently rent an apartment in NYC and am wanting to relocate to NJ or upstate NY soon, but prices are insane to buy anything I want. My hope is that I can get this property and once I'm done with a small rehab, get a HELOC on it so I can buy a home to live in instead of renting. Thoughts on this plan?


The ONLY caveat is the current renter hasnt paid rent in over 6+ months. I havent had a chance to talk to the guy at all, but if I put some effort into it I know I could get the guy out. My dad is just a non confrontational guy and doesnt want to deal with it. There is no lease so nothing I could do legally from what I gather. Should I try to get him out before I buy this thing, or buy it and figure it out later?

Lots of info here I know, but I feel like I'm in the analysis paralysis stage. Have been running the numbers on this thing for over 6+ months and am scared to pull the trigger. Any thoughts or advice from anyone?

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Alex Deacon
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
3y

100% first thing to do BEFORE you buy is get the tenant the hell out. Let your dad know this. I don't know the market you are speaking of well enough to comment on values etc... I manage 720 units in Pittsburgh and I own an extensive portfolio here. Thats what I would recommend.

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  • Harold Looney
    Member since 2023 · 98 posts · 31 votes
    3y

    Austin Mulhern - Congrats on taking the initiative to move forward with this awesome deal. You've found the rare gold mine of a tired landlord who is just looking to get out of a deal. Even if you decide you don't want to buy/hold and deal with tenants, you could fix and flip the property for a nice profit. Or, if you want even less headaches, you can sell as-is to a local Real Estate Investor. 

    I only know NYC Landlord/Tenant Laws. I trust you will get some feedback from Investors who know the Nanticoke PA Landlord/Tenant Laws.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Austin Mulhern:

    It sounds like a great opportunity.

    Even without a lease, the occupant has rights as a renter and you have to evict them through the court or negotiate something directly.

    I manage 400 rentals and I get rid of tenants all the time without standing in front of the judge. As soon as you show them you are serious, they will typically pack up and leave. Since you are new at this, I recommend hiring an attorney so it's formal, objective, and legal. Another option is to offer them 15 days to vacate and you'll forgive them the debt. If they choose to stay and fight, you'll not only evict them but you'll seek a judgment for every penny owed, including late fees, court filing fees, attorney fees, etc. That usually motivates them.

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  • Alex Deacon
    Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    100% first thing to do BEFORE you buy is get the tenant the hell out. Let your dad know this. I don't know the market you are speaking of well enough to comment on values etc... I manage 720 units in Pittsburgh and I own an extensive portfolio here. Thats what I would recommend.

    1Reply
  • Scott Pearson
    Hunlock Creek, PA · Member since 2019 · 68 posts · 35 votes
    3y

    Hey @Austin Mulhern,  I think with renting in Nanticoke you really need boots on the ground.  Someone that can be there when something goes wrong.  As for evicting the person living there your dad needs to give them a 30 day notice to vacate the property.  When they don't he will need to file a case at the magistrate office.  I don't recall the waiting period but is fairly short, a hearing can be held and the person evicted.  Now it might take a sheriff to actually get them to move out.  I would expect it will take a good bit of cash to make it livable again.  If the person does not care to pay rent I doubt they care about taking care of the place.  

    If its really worth 150k and you can get it for 47k then that's a good deal.  Even if you just turn around and sell it.  Just a thought here,  If you put in the effort to sell it as is then just split the profit with your dad just to keep peace in the family.   

    Anyway good luck with whatever you choose.  

    Scott
     

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  • Matthew Nelson
    Investor · West Pittston, PA · Member since 2022 · 16 posts · 5 votes
    3y

    Nanticoke is going to have a $6B gas refinement plant built in the coming years so hopefully w/ the increase of jobs & population to the area the property's value will greatly appreciate.

    The problem now is that Nanticoke isn't too great of an area to be in and w/ that you'll have problem tenants. If possible, I'd have your father start the eviction process so you'd be able to jump right into the renovations after the sale and learn to vet your tenants a little bit better. If I were you, I'd be on this yesterday.

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  • Austin Mulhern
    OP
    Member since 2022 · 4 posts · 2 votes
    2y

    Update on this -

    Ended up kicking the old tenant out in October of last year, and started getting to work as soon as I could in between work in NYC. Saved a bunch of money doing everything alone with some help from friends and family. Shallac everywhere on floor and walls, fresh paint, new floors + trim. I'm about 5 full days of working on the house for it to be ready for rental.


    Since its my dads house, I had the luxury of starting the reno before I officially purchased it from him. Just applied for a mortgage through my credit union (PSECU) yesterday, and waiting to hear back.


    Hopefully I can get it on the market by March 1st and the latest! 

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