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Updated almost 8 years ago,
Potential BRRRR opportunity, need advice, tell me what I'm missin
Today I located a property in my area for 35K from a wholesaler. The renters were paying 1000 a month until there was a leak behind the dishwasher and whoever was the landlord at the time took it out without replacement and lowered to 750. He does not have a copy of the current rental agreement, so I can't verify this except maybe to ask the tenant. However $1000 a month jives with the rent zestimate on Zillow. If he doesn't have a copy of the lease...then how does he hold the tenant accountable for payment......????? Says he does not have a rental history for the current tenants. Seller told me that he acquired properties from someone who left town quickly. I found the original owner's name online, but the seller provided a different last name, so I think she probably got divorced. She now lives in Texas, and I have tried to contact her for more info with no luck yet. He says the house "Needs minimal work, brand new roof, needs new AC, electrical needs in the basement." Also mentioned on the phone that there is a small leak in the basement that would need to be repaired as well. The property has a Zestimate of $88K. I know this is not always accurate, but until I get comps, it is what I have to work with, and even at $80K ARV, 70% would still give me $21K to work with on rehabs. If I refinanced at 60K I could still cash flow about $100-200 a month based on ROUGH but conservative (I think) estimates. Seller says he has two other buyers who have said they will bring earnest money on Monday and that he wants to close in 10 days. I understand he could just be saying that to rush me in to making a quick decision or simply to reduce his holding costs. I could finance with a bank or probably get together enough to pay cash. The property was listed on craigslist 6 days ago and is otherwise off market. I am thinking of trying to make an offer tomorrow or early Monday morning.
I know that I need to:
Get a contractor to look at the house and give me a rehab estimate (either before I make the offer or during due diligence period)
Get comps from a realtor for sale price and rents
Get an inspection
Have a survey completed (maybe?)
Have a lawyer look over my offer. (My mother-in-law is a lawyer, but not specifically a real estate lawyer. I imagine she could navigate a real estate offer. Am I wrong?)
I could probably get comps and a contract together by tomorrow.
My questions are:
Is this too quick?
Does it seem like this guy is scamming me?
I am leaving on a deployment with the military on 7 March. Do I have enough time to work my 9-5 job, do my due diligence, and get property management in place by then?
Should I make an offer on this house now with escape clauses in case it starts looking shady?
I am working without a realtor and have never bought without one before. What should I include in the contract (escape clause for maintenance?, survey of property?, escape clause for appraisal value?)?
A realtor needs to be there for inspection correct?
WHAT AM I MISSING (aside from the obvious records that I would expect to accompany a purchased rental)?
This would be my first deal if I did it, and I don't want to completely screw it up, but the cash outlay looks like about $12K, so not really putting the farm on the line if it didn't pan out. Please respond quickly and specifically to each question if you can. Any added advice is welcome. Thank you.