Home we’ve been renting for past 10 years is being sold! Is there opportunity?

Question

My mother and I have been renting a home on Long Island for the past decade. The landlord, who lives in Indiana, recently notified us that she plans to sell the home and we have 90 days to find a new spot. We’ve been good tenants paying on time for the entirety of our stay here.

The property owners are brother & sister (and I believe a third sibling), but they’re never really on top of things, and no property management. I believe this may have been passed down to them prior and they don’t really do this often based on the condition of the home, and lack of communication.

The back yard is overgrown with weeds, the sidewalk has been damaged and rubble for years now. The roof has been replaced once but still leaks. There are water stains in the ceiling, the electric needs some help in the floor two bathroom, as well as the water pressure in the shower. The walls on the second floor show white chalking and also some sort of drip marks. And there are also leaks coming in at the corners of the ceiling from the water management.

It’s an old Levitt style home with asbestos underneath the siding, and just extremely outdated. Four beds, two baths. The only things that have been updated since living here has been the roof (but still leaks), the boiler (a reactive replacement after the kitchen flooded), as well as the floor kitchen cabinets (also after a major leak of which we mentioned multiple times) - which still kind of leaks. All this to say there are definitely some issues.

My question is this: Is there any opportunity to wholesale this? And if so, what steps would you take first, and how would I go about reaching out to the landlords. I’ve never had contact with them - it’s usually been my mother. The property definitely seems to be undervalued, I just don’t want to miss out on what could possibly be a great opportunity.

Any advice would be greatly appreciated. This would be my first deal. Thanks!

Bradley Buxton · Answer

House hacking is not for everyone and it's only one strategy. Keeping in mind it's not forever and it's a stepping stone to building wealth. If it were easy everyone would do it. Do what works for your lifestyle and energy. With any strategy you'll have your fears and unknowns how you overcome those with bring growth in the RE space.

Pat Quaranto · Answer

@abel @Abel Curiel Great, Appreciate it. Didn’t realize you were located in Queens! Pleasure to meet you

Theresa Harris · Answer

If you've been living there for 10 years, clearly you made it your home. Why not talk to them about buying it?Talk to your realtor friend, they should know people who can give you that info-you may need to pay them for their time.

Pat Quaranto · Answer

Thanks for the info! Really appreciate it. I was able to get comps from a friend of mine who’s a real estate agent, but how do I go about finding exactly how much work needs to be done to the home in terms of a dollar amount? Do I get quotes?

Alan Asriants · Answer

Agreed with Bradley, why not look to purchase this home yourself. If you can get a good enough deal to wholesale I'd probably keep it. Long Island will always be a desirable market.

Abel Curiel · Answer

Hello @Pat Quaranto,I would let the seller know that you and your mother are interested in purchasing the property. Ask them if they are looking to sell the property in its current condition (they'll likely say yes given the background you shared). Then, find out how much they'd like to sell the property for given its current condition and local area comparable sales. As part of your research, check out sold properties on zillow, redfin, realtor, etc. If Levittown 4/2 cape style homes are trading at $699K fully renovated (for example) and the home needs ~ $200K in work, you'll know that any asking price above $500K would likely not be worth it. If the seller's price is unrealistic at first, its OK because you still have leverage... the property won't hit the market until Fall AND you know more about this property than anyone else. Not to mention, dealing with you directly will save the owner 10's of thousands on broker fees. If you are still interested in this deal after your research and thinking about the potential upside, then you can begin your 'pitch' by assuring the sellers that they'd save time AND money by dealing with you directly. All you'd need at that point would be RE attorneys for the contract and formalities.To find recommendations on seller financing deal structure, I'd start right here on BiggerPockets by using the SEARCH feature and playing around with different keywords i.e. owner financing, seller finance deal structure, seller finance terms, owner finance terms, etc.All the best!Abel

Bradley Buxton · Answer

@Pat QuarantoWhy not house hack and get some low interest seller financing? Fix up the house and sell it and put the equity gains into a multifamily house.

Pat Quaranto · Answer

Then that would mean sharing living spaces. Not sure how comfortable I would be with that, especially people I don’t know. I guess I can find some friends or friends of friends but not sure with the condition of the home

Abel Curiel · Answer

@Pat QuarantoLOL Good question! the threads turning into a novel!To post a reply, Go to the bottom of the thread and you'll see the space to start typing. If you're directing your reply to someone, tag them.Good luck with the property!!Feel free to reach out if you have questions regarding comps or anything else

Bradley Buxton · Answer

Some people rent out by the room. It depends on how many rooms you want to rent out. If you have a 3 bedroom and you live in 1 maybe only have one roommate would cover enough of your payment that makes you comfortable. Keep in mind when you leave and buy your next property make sure the house can at least break even when you're not living there.