Should I buy a property from the owner vs agent.

[Monica Jones]

So I’m very new. But there’s this property im interested in, It’s a fourplex and it has 3 bd 2.5 bath in each unit. It is gutted and ready for sale but the property has been there for years and has plumbing problems and no electricity. So I’m not sure how to go about getting someone to give me an estimate on repairs before trying to purchase for one thing and two it’s 90,000 (from an agent) very cheap but it’s only worth about 30,000 on the assessors website. Can I buy it straight from the owner? Or is that unethical? I will be starting my real estate classes for my license this month. But I really want that property. Also it’s 3 other properties same area but different owners. So I’d like all 16 units eventually.

[Russell Gronsky]

@Monica Jones, you are very new, and you want to buy an un-inhabitable 4-plex, and you want to rehab all 4 units.

I hope you have A LOT of cash set aside, ready to deploy because you CAN do the above, but your trial by fire real estate education will be very expensive. Personally, I'd absolutely do it, if I were you. Just know you'll spend way more cash than you expected and this will take way longer than you expected to complete the work. You should be looking at something like a 203K loan on this AND having lots of cash available for emergencies.

You can approach the owner but if the property is listed with an agent, the agent will get their commission either way so you won't save any money there. However, you may be able to convince the agents to represent both sides of the transaction for a reduced commission. Typically, the buyer can request 1-1.5% back from the agent at closing. Many agents balk at this but some of the savvy ones love this scenario. It is normally just 1 document you sign saying you understand the agent is working both sides of the transaction and may not be able to provide you the best advice because of it. Super easy.

Don't bother looking at assessor websites to estimate value of a property. It is absolutely NEVER accurate...not even close...ever. Assessor sites are good for finding names of property owners and to get an idea of what the current property taxes are on a property. 

If the property is gutted, there is no point in having the house inspected. Take a GC with you to walk the property and if they refuse to do so until you have the house under contract (most will require this) offer to pay them $100-$150 to come for the walk-through. Tell them you want a detailed estimate with material and labor cost itemized so they know ahead of time. This avoids issues later when they email you an estimate with a lump sum or a draw schedule that doesn't break out the work at all. That's not going to be as valuable to you. This will serve as your baseline estimate and you can compare the other estimates you get from other GC's to see who gives the best value to you based on price, experience, etc.

The GCs you find....find them through your local REIA or other investor meet-up and ask the people who are the flippers in the group or the HMLs, they can get you solid names or leads to good GC's that are investor friendly. You can ask the buy/hold investors but they usually play with the "remodeler" level construction company. You are looking for a no-kidding GC who has experience doing full gut rehabs. This is a totally different type of construction company.

You'll also need to familiarize yourself with the building department of your city/county as it sounds like this place is stripped to the studs and joists or you will probably have to rip it down to studs and joists and rebuild the entire thing. You'll have to get every inspection done and get a certificate of occupancy at the end of the work so you can actually rent the units out, so you'll want to be on good terms with the city/county.