First real investment

[Darell Holmes]

I am in the process of purchasing my first investment , my residence, I need feed back on this deal. The house is sitting on 3000 sq ft, was listed as a 3br- 1b, for $125,900, the comps is between $55,000 - $150,000 at a 7.5 interest rate. We plan on using 3.5% FHA loan with a 6% seller assets. The is an estate property with no property disclosure selling as is, my agent informed me we will be responsible for all upgrades, there's no GFCI in the home and railings to qualify for an FHA loan. I suggest a 10% off the purchase price without seller assist. My Leander and agent said that's not a good deal. The property has been relisted as 4br-2b is this common?, base off the knowledge I have learned at BP, I feel this is not a good deal, I am trying to analyze this to best of my knowledge but can't come up with a better proposal. Do anyone know what's the best way to attack this deal.

[Matthew Morrow]

Daryl,

Disclaimer* I run  a team of investor/agents in the Lehigh Valley, so this is not intended as any solicitation, just general info to your post. Please consult with your Agent and appropriate parties for specifics.

Here are some key points to consider for your deal:

1. Comps and Pricing: If the comps range from $55,000 to $150,000 and the house is listed for $125,900, ensure that the higher price is justified, especially if the property requires significant upgrades. In our market- this is a huge range, and should be cut down to a minimum of 8-10% max. Definity some conflicting data here.

2. FHA Loan Requirements: FHA loans have specific property condition requirements. If the house lacks GFCI outlets and railings, these will need to be addressed to qualify for the loan. Factor these costs into your analysis. Many will need to be done prior to settlement, and some owners just are not willing to deal with this. Maybe consider a low down payment conventional loan 5-10% down which does not have the same FHA mechanical requirements

3. Negotiating Price: Proposing a 10% discount without seller assist seems reasonable- but there are many factors that play into this, especially considering the property is sold as-is and requires upgrades. If your lender and agent advise against it, ask for specific reasons and calculations. We tend to make a fair as-is offer price, and then request sellers assist, instead of price reduction. This is then dollar for dollar cash you do not need to bring to closing and can then complete the required repairs. 

4. Relisting with Different Specs: The property being relisted as a 4br-2b could indicate a discrepancy in the listing or recent modifications. Verify this change and reassess the property's value accordingly. If this is in Allentown, Bethlehem, or Easton proper- this MUST match the City CO / occupancy requirements. We see misrepresentation in listing facts all the time. 

5. Deal Analysis: Trust your judgment and the education you've received. If the deal doesn't seem right based on your analysis and market knowledge, it's prudent to be cautious. Consider other properties that might offer better value and fit your investment criteria. If you are not receiving education on this, find an agent or mentor who will talk thru the deal with you- NOT just the purchase. Its a long road and you need to be comfortable with it as an investment AND house hack. 

In any real estate investment, thorough due diligence and alignment with your investment goals are crucial. Dont fall on your face just to get a deal, youll regret it. 

Feel free to reach out if you have any questions or want to chat. My contact info is on the profile. 

Best of luck

Matt