Thinking to buy cheap cash $12K house in Fort Worth

[James H.]

Hi guys. I previously introduced myself as a newbie from the Dallas/Fort Worth Metroplex and am onto searching deals since my introduction.

Recently I came across a 12K cash deal. The house is habitable as is, but would probably need 3 to 4K to get it up to the standards where I would live in it and feel like I was living in a real house(I mean if I HAD to). The neighborhood leaves some to be desired, but doesn't strike me as a war zone and I did feel relatively safe in the neighborhood (although would not feel safe there at night walking around the street with no reason to). This is a 1953 house, small 750ish sq ft with 2 beds and 1 bath (that is the totally nasty part that will require a new toilet and maybe a new tub.) The tax appraisal is only 22K but Zillow estimates are about 30K. There really isn't a whole lot of data for this area to be obtained from the MLS. My thought is that if it is a decent habitable home with new paint, decently finished wood floors and new vinyl in the kitchen and bath (and other bath improvements) it couldn't hardly rent for less than 4 to 5 hundred a month. Taxes and insurance will run about 100/month. This is in northeast Fort Worth, Texas and is about 5 miles from down town.

Oh, and the wholesaler selling it is picking it up off an 85 year old guy that wants to get rid of it because his son died in it recently (no fowl play). The body was in there three days and it stunk it up, but they had it professionally cleaned by one of those dead-body-cleaner-upper-after companies. So it still smells a little weird, but it is also 105+ degrees here and has been for over a month with no ventilation in the house. Seriously, I don't think it will be a problem once it can air out a little more and has new paint. It doesn't smell that bad - just a little weird.

So, what are your general thoughts on owning low value properties? I love the idea of owning it fee and clear. It might not attract the best tenants, but I could let it sit for months and months to screen for the best tenants and only have 100/month expenses for insurance and taxes and minimal yard car. It still seams a little scary because it is a lot of money. Even though somehow my mind is programmed such that I would feel more "comfortable" putting the same 12K into a DP, closing and rehab costs and then financing a mortgage on a bigger house more familiar to my senses. But, logically, that doesn't make sense. Sure my tax break would be smaller on the cash home, but it seams so much simpler and certainly lower fee.

Any general thoughts are greatly appreciated. Success and failure stories with cheap house similar to what I am looking at would be great. There may even be a possibility to flip this little thing if I played my cards right. Not really part of my long term plan, but I am open to anything that makes a profit. Thanks in advance for your greatly appreciated input!

Brian