$5,500.00 REO Purchasing in Atlanta, Georgia from California

[Bridget D.]

Hello Everyone,

First I'd like to say thanks for taking the time to read and hopefully answer the question that I have.

I live in Southern California and although I've been in the real estate field for 8 years, the only purchase I've made is my primary residence. I finally got up the courage to look into investing about a year and a half ago and of course I wanted to start low which meant purchasing out of town. I placed a bid on a HUD home in Atlanta, Georgia which is a 3 bedroom 2 bath the cost a whopping $5,500.00 . A friend of mines lives in Georgia and her and her husband were nice enough to go by the place. Just as I figured it has been completed gutted and bascially has the frame, roof, bar doors and some windows. I planned on rehabbing the place over a course of a year or shorter and either renting, lease to own, or eventually selling.. The problem is I have no idea what a rehab would cost or if it's even worth it to get involved with a home with nothing in it literally. The agent has given my friend the access code to go in the home and the zillow estimate is $105,700 while the assessor market value indicates $122,100 (I'm sure that's estimated on the home being livable.. Lol.. Any experience or answers would be most appreciated.. Thank you all :)

[Aaron McGinnis]

Bridget,

The area that house is in is called Pittsburgh. Not too many years ago, it was named the most dangerous subdivision in the country. Cops avoid it. When I get a call from a person who wants to see a house in there, I either tell them "Flat out no" or I bring both the pistol and the shotgun.

The high sale in the past 6 months in that neighborhood was $53,000 for a 2004 built house. Like any other house that is left un-attended for more than 5 minutes in that SD, I'm sure the new owner had to replace everything that was made of metal and most likely had to replace the carpet to get rid of the meth-burns.

If you choose to buy this house, you need to renovate it to section 8 standards only... and no more. Get an asset manager who is tough as nails and hangs out in biker bars and has no problem tossing out clients who brew meth in the bath-tub and who think that turning tricks on the weekend is a good occupation.

Listing agents who are experienced know better than to put "Pittsburgh" as the subdivision in the listing... it's too easy to google and thus an easy way to lose prospective buyers.

There are houses on the market for over $100k, but they aren't moving and have probably been relieved of anything made of metal since 5 minutes after the renovation crew left. They're probably now inhabited by a meth brewer who thinks that turning tricks is good weekend entertainment.

Now, if you really enjoy headaches and like replacing windows and HVAC line-sets every week, please... buy this house and rent it out.

Otherwise, drop the contract like a load of flaming napalm bricks and find yourself someplace that will attract a tenant that won't brew meth in the bath tubs.

Example: There's some flaming hot deals in 30032 and 30034 zip codes right now for landlords who are going to hang on to the property for a few years.