Real Estate Deal Analysis & Advice
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 10 years ago,
Interesting real estate lead from FreeCycle
Here is a lesson to keep on the lookout for leads no matter where they come from.
I was giving away some things on Freecycle. (If anyone does not know what that it, it's a bulletin board to give away things to "recycle" for "free".) One woman responded that she needed some smoke detectors. (I was giving away the 9-volt battery ones because I replace them in my rental properties with 10-year devices.)
I have 4 of them, so I asked how many she needed. She said she just needed 2 because she wants to sell her house and the ones she had stopped working.
So then I asked her about selling her house and we got into a discussion about it. It's located 5 minutes from my house, in a very nice neighborhood (one I have 3 properties already in). I let her know that I'm a real estate investor and I'm always looking for opportunities to buy houses. She said she's on her way over there to work on cleaning the house and would I meet her there. Sure!
I head over to the house and it is in a very nice area; I would definitely live in this neighborhood, no hesitation. However, the house needs some work -- both house and garage roof need to be replaced. Carpeting in the whole house is 15 years old and its showing its age (stained and ripped in some spots). It needs some patching and painting. The kitchen counter tops are original. But it has a new furnace, good foundation, nice layout, a deck out back, a nice 2.5 car garage, fenced in yard and shed.
She has already moved out and is just going back there to get rid of the rest of the stuff. It was a family home; her parents were the first people to live in the house then she took over from them. But she's had medical issues and can no longer manage the upkeep on the house let alone pay for the repairs.
So I can see why the house sat on the market for 9 months without selling. Retail buyers don't want a house filled with stuff, and have to consider getting into replacing 2 roofs right away. She owes about $5k-$10k under market value if the house was fixed up, but she doesn't have that $10k to get it fixed up. So she's looking at a short sale but is worried about that affecting her credit.
This seems like an opportunity to buy subject-to and rent the house out (the individual has been told to do that, but she has no idea how to be a landlord nor does she want to do that -- plus again the "no money to fix up the place to get a renter" situation). I've never done a subject-to or ever came across a prospect that would be worthwhile to do that on. So it's definitely something I'm willing to take advice on.
I do understand the "due on sale" clause and I have the funds available to pay off the existing mortgage if it should come to that. (I would hope to use the existing leverage of the mortgage she has if possible.)