Updated about 6 years ago on . Most recent reply
When to cut a deal loose?
Hey BP Members!
I'm an agent and 1st time investor and I wanted to ask fellow Investors their opinion on my current situation. So I just made an offer on a 3-4 Family Home it's currently out of attorney review and we just completed the inspections. To my surprise there was a lot more that needs fixing than was initially advertised. The MLS had this gorgeous picture of recently renovated basement which had a full kitchen 3 beds and 1 bath. As of today that picture cannot be further from the truth. In New Jersey you need to pass a Certificate of occupancy in order to live in any home or rental. That basement would not pass due to the kitchen. So the seller wound up tearing down the new cabinets sink and appliances. Today that basement is not only flooded by a mysterious leak but also signs of mold have begun to pop up. Inspections revealed that this "Move in Ready" home that only needed cosmetic work (as described to me by the listing agent) actually has a roof that is barely hanging in there, a chimney that's nearly about to fall, and I need to replace 4 boilers. Not very fun. The original ask price was 370 which got negotiated down to 350. The potential ARV for a 12 bed 4 bath multi in the area can range in 450-600 range. Now after this news I will try to leverage that to negotiate it down to 300 to keep my all in budget with repairs under 420. Question is at what point do I begin to think this problem isnt worth the hassle and cut my losses? My 1st exit Strategy is to wholesale to an investor that has more capital to invest, but I cannot shake the eeling that I would be letting a gem go. How long do you guys hang in an investment before you throw in the white flag?
Most Popular Reply
@Jay Batista I would bail the second you seen that the basement has a mysterious leak and a build up of mold. That usually means that there is a reservoir of water under the land or that there a crack in the foundation. That will be a heavy price to pay to fix and will only keep coming back until fixed properly. I am no expert in the field whatsoever but that will be my sign to bail. Too much work and pain to fix. Giving I didnt see the property and cant tell what the underlying issue is. Mold in the basement is a big No-No. Mold is caused by moisture and lack of ventilation so yeah thats the deal killer for me personally. Someone might say something different.