Is a property that is underwater a red flag?

[Matthew Villegas]

I am considering buying, renovating, renting, and refinancing (BRRR) a property in the Albuquerque area and have found a single-family home that appears to be condemned. My real estate agent sent me a report that shows it is valued at $ 324,000, but the mortgage loan balance is $415,000.

I am not aware of the issues with the property, but I plan to investigate them soon. What do you think? Should I run like hell, or is there an opportunity here? The home is located in a much sought-after, popular neighborhood in ABQ.

Thanks!

[Jaycee Greene]

Quote from @Matthew Villegas:

I am considering buying, renovating, renting, and refinancing (BRRR) a property in the Albuquerque area and have found a single-family home that appears to be condemned. My real estate agent sent me a report that shows it is valued at $ 324,000, but the mortgage loan balance is $415,000.

I am not aware of the issues with the property, but I plan to investigate them soon. What do you think? Should I run like hell, or is there an opportunity here? The home is located in a much sought-after, popular neighborhood in ABQ.

Thanks!

Hey @Matthew Villegas, welcome to the BP Forum! I'm not a real estate attorney, but you'll need to understand where the lender is on this property. Sounds like this might be sold as a "short sale", which has its own requirements. And if it's condemned, I would expect there are a lot of repairs that need to be made AND the city/county will need to inspect the property before anyone can occupy the property. I wouldn't necessarily run at this point, but you'll need to really feel good about your numbers (ARV, rehab costs (if any) and the rents) before you make any offers. Also, I wouldn't necessarily put a lot of stock in the $324k value either.