When a house sits on Zillow for 178 days...

[Ashley Wolfe]

There's a 3/3.5, 2,250 sf 1959 SFH that I found on Zillow today that is priced at $67K. Its been on Zillow for nearly 6 months. Its in a decent part of town. I would no be opposed to living there myself. The description says its got an updated HVAC and roof. Driving by, the roof looks good. Siding needs to be 100% replaced. The house doesn't have a garage or carport, just a concrete pad in the back. Small but cute yard. Indoor pics show the need for extensive updating. Its next door to a church and within walking distance to the local elementary school and town library. The school district has a good reputation.

In driving the neighborhood there are all different sized houses, some old, some new. Looking at the comps on Zillow (please note: I don't have knowledge of any other market research tools and I don't currently have personal access to the MLS), this house has great potential. There's a 3/2 2,700 sf house priced at $140K on the same street and several others nearby in an adjacent neighborhood that are in the $110-$150K range.

I called the listing agent and left a message.  I want to know why this property has been on the market for so long.  And, why else do properties like this sit for so long?  Would a low-ball offer of $25K be passed up if we had it in cash tomorrow?  I feel like I'd like to get it under contract and start some due diligence.  I would have thought that a seasoned investor in my area would have snatched this one up long ago!

With a house this big, would it be silly to think of doing a rental rehab and trying to rent it out?  On rentometer.com it came up as around $1400/month potential rent rate.

Doing the math on this one is tricky to me because the asking price is already so low.  

$65,000*.65=$42,250

minus repairs of $10000 (only a preliminary estimate) to get it rent ready - $32,250

So, our MAO for renting it out would be half of what they're asking. Does that seem crazy to you?

[Nnabuenyi Anigbogu]

Originally posted by @Ashley Wolfe:

Originally posted by @Scott Carder:

Its probably worth the full 65k, but everyone thinks they can get a deal.

 Let's pretend we paid the full $65K for it, put in $30,000 worth of work and sold it for $110,000.  That would still be a nice little profit of $15K.

So if everyone thinks they can get a deal, how do you structure your deals or what's your approach?  

 You would actually have a lot less than 15K profit. Keep in mind when you sell you pay 5-6% in commissions to both the seller and buyers agents. on 110K that is 5500-6600 dollars. So your profit is now down to about 9K. Once you factor in closing costs (title, attorney fees, transfer stamps, etc) you could be down to 5K in profit. That is probably not worth it. Also all this is assuming you have no money costs.

I point this out because a lot of newer investors make this mistake and end up losing money on their first deal.