Possible Deal in VA... need advice

[Chris Mouzon]

BP community - My friend approached me about a property that he purchased almost 6 years ago in Richmond VA. He went in on a deal with his brother to fix & flip this property, but for whatever reason, plans fell through. They purchased the house for $120K but now, looking at comparable's in the area, the property is only worth maybe $70K. My friend wants to unload this property as soon as possible and asked for my help. I'm trying to find the best way to cover my friend and make it into a good deal for myself as well.

After getting more insight here on BP, I think that a lease option would be a great way to go. I can have my friend agree to the option where I purchase the house from him in 3-5 years for a certain price around $70K (which is what its worth now), and look for potential buyers in that area to do another lease option, with shorter terms, with hopes that they purchase the house for more. I can find someone in the meantime to get the property rented out, so I do not have to pay the mortgage while searching for the buyers. Pay off my friend when the house sells and keep the change. Win-win, right?!

Now the only problem is, we currently live in Los Angeles, but as I said before, the house is located in Richmond, VA. From the pictures I've seen, plus speaking to a couple RE agents in the Richmond area, it seems as though the house is not located in the best area (a few abandoned homes, not the nicest neighborhood, no great houses on the street). I'm figuring we can add value to the house, but since I haven't seen it, I'm not quite sure.

So my questions are: 1. What are the main factors I should consider to determine whether this can be a good deal? Is it possible to analyze a deal from such a long distance, without ever seeing the house? What information do I need to do a proper analysis? 2. If it is able to be rented out, how do I start to find tenants? Should I enlist the help of a RE agent or property management company in VA? 3. Is the lease option a good strategy to use on a property like this?

Thanks in advance BP community!

Chris

[Bill Gulley]

Originally posted by @Chris Mouzon:

BP community - My friend approached me about a property that he purchased almost 6 years ago in Richmond VA. He went in on a deal with his brother to fix & flip this property, but for whatever reason, plans fell through. They purchased the house for $120K but now, looking at comparable's in the area, the property is only worth maybe $70K. My friend wants to unload this property as soon as possible and asked for my help. I'm trying to find the best way to cover my friend and make it into a good deal for myself as well.

After getting more insight here on BP, I think that a lease option would be a great way to go. I can have my friend agree to the option where I purchase the house from him in 3-5 years for a certain price around $70K (which is what its worth now), and look for potential buyers in that area to do another lease option, with shorter terms, with hopes that they purchase the house for more. I can find someone in the meantime to get the property rented out, so I do not have to pay the mortgage while searching for the buyers. Pay off my friend when the house sells and keep the change. Win-win, right?!

Now the only problem is, we currently live in Los Angeles, but as I said before, the house is located in Richmond, VA. From the pictures I've seen, plus speaking to a couple RE agents in the Richmond area, it seems as though the house is not located in the best area (a few abandoned homes, not the nicest neighborhood, no great houses on the street). I'm figuring we can add value to the house, but since I haven't seen it, I'm not quite sure.

So my questions are: 1. What are the main factors I should consider to determine whether this can be a good deal? Is it possible to analyze a deal from such a long distance, without ever seeing the house? What information do I need to do a proper analysis? 2. If it is able to be rented out, how do I start to find tenants? Should I enlist the help of a RE agent or property management company in VA? 3. Is the lease option a good strategy to use on a property like this?

Thanks in advance BP community!

Chris

 In   reality, no, you can't help or do a rehab from across the country, sight unseen, you need boots on the ground.

Renting is what he   needs to do, not with an option to buy at 120 either.

Your friend is stuck, can't correct his mistakes by passing on his problem to someone else, he needs to ride it out now, 5 years ago was the time to get rid of it.

In a declining area, you can't add value beyond what that area will support. Revitalize the area first! Look at those vacant properties, get the neighborhood involved and bring the area back up. Very hard to do but it can be done, get the city involved with economic development.

Get with a local Realtor to manage as a rental.....but your friend needs to do that. This is not a deal of any kind for you.....you need to gracefully back out, like "sorry man, I can't get involved in something like that" sounds like he's wanting you to write a $50,000 check for his loss. The only thing I see in this for you is trouble.

BTW, welcome to BP, sorry your first deal here fell flat. :)