Are free prosperities a good investment?

[Ronda Lewis]

Recently when working with an investor on a wholesale deal the investor offered me what sounded at first to be a great opportunity. He would give me 3 properties in Gary, IN for free. All I would have to do is fund the repair cost. The way he would set it up is to allow me to fix up the 1st property and after the repairs are completed he will transfer the title to me (all the legal paperwork will be in place) and than he will give me the next 2. The problem is the city of Gary is overall a very distressed area. The 1st property is a full rehab from top to bottom, which I'm estimating to cost between $25K-$35k (it's a small house). Most of the homes in the area county owned due to the poor economy of the area, so most sell for no more than $40k. At retail I'm calculating ARV after repair around $90k, however, I anticipate that due to the location it may be better as a buy n'hold. That being said, market rents are about $800 - $850. Is this a smart opportunity to get involved in?

[Greg Scott]

"Once the repairs are completed he will transfer the title to me" sounds like he is looking for a free rehab and a sucker to do the work.

I've looked at houses in Detroit that were not worth the $500 price tag. But, if you think you can do the repairs for $25K (assuming you are not doing the work yourself) and the salable ARV is $40K, that might be a good deal. I'd just own the house before doing any work.