Neighbor passed away. House is vacant. Potential flip/wholesale?

Wholesaling
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Neighbor passed away. House is vacant. Potential flip/wholesale?

Ryan Redmond
RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes

Hey, everyone. About a month ago the sweet old lady next door passed away. Her nephew mentioned that they'll probably end up renting the place out but the house would need a LOT of work- paint, carpets, landscaping, new driveway, and whole kitchen and bathroom would probably need to be ripped out. And that's just the things I'm aware of. 

All the garbage from inside the house is piled up in bags in the front yard too and I haven't seen anybody over there doing anything with the place for weeks now. I'm beginning to wonder if I might have a potential fix and flip on my hands if I can get him to sell for cheap enough and if I can find financing for it. Even if I'm unable to fix it up, if i could get it under contract for the right price I wonder if I'd be able to wholesale it to someone in the BP community.

This is in the Louisville, KY Camp Taylor area, btw. I know you're operating with limited information here, but what do you guys think?

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Derek W.
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
10y

@David Dey I like the first half of your post, but Do you think that the second part is good advice to a newbie? He is not sure yet how to pull comps, and you think that buying out fractional interest in the estate is a good idea? My advice would be he finds a local expert in probate investing and partner the deal with them. That way he can learn and earn.

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  • Mary B.
    Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    10y

    We need some figures to work with. I know you must have run some numbers by now, right? Let's see them.

    Kudos,

    Mary 

    1Reply
  • Glen Nash
    IT Director · Louisville, KY · Member since 2015 · 43 posts · 20 votes
    10y

    I would be interested if the numbers worked. Let me know.

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Well, not much. I don't have any real experience with this yet, so I'll try to give conservative ballpark numbers. I know the house is brick, 750 sq ft, 2 or 3 bed/1 bath, was built in 1957, and has an estimated market value between 75-85k when fixed up, of course. While some of this info is from Zillow, which isn't known for its accuracy, comparable houses in the neighborhood have sold for similar prices. Without paying for a professional home inspection I have little idea how much all the repairs would cost, but my conservative estimate would be about 20-25k. Unsure how quickly contractors could rehab the place without knowing the full extent of the damages, but taking how small the house is into account it should be doable in 3-4 months (assuming the contractors are reliable, of course.)

    This is all still very hypothetical because I have yet to track down the nephew again so I don't even know if he'd be willing to sell for cheap. I just suspect he doesn't want to deal with the property since it needs a lot of work and he left all the trash in the yard weeks ago and hasn't been back since. I guess I should try to track him down first and ask a contractor for a rehab estimate. 

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  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    I tried putting the info through the BP wholesale calculator but I'll need more accurate info to get a better idea of potential profits for interested investors. But if my current estimates are remotely correct, I'd have to offer about $20-25k to get an investor $15-20k profit from a flip, netting me about 3k. Keep in mind, these are very rough but conservative numbers. 

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  • David Dey
    Investor · Lakeland, FL · Member since 2015 · 344 posts · 606 votes
    10y

    in a nutshell, yes you may have a deal.  Have they started a probate to get the property into their name?  If they haven't, you may have an absolute gold mine on your hands.  

    It could be that they don't have the money or the desire to actually do a probate in which case they may take a larger discount just for their interest in the deal and you do your own probate as the owner of their interest.

    They may accept 5-10k for their interest in the estate.  You will need to know who all are heirs.  ( ex: 4 heirs equals, you may have only bought 25% of the interest, etc.) so do your homework.

    1Reply
  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    10y
    Also check for liens on the property. The profit if any is small so any unforeseen items could easily eat up any potential profit. Good luck!
    0Reply
  • Glen Nash
    IT Director · Louisville, KY · Member since 2015 · 43 posts · 20 votes
    10y

    Keep me posted on the developments. I am interested.

    0Reply
  • Derek W.
    Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
    10y

    @David Dey I like the first half of your post, but Do you think that the second part is good advice to a newbie? He is not sure yet how to pull comps, and you think that buying out fractional interest in the estate is a good idea? My advice would be he finds a local expert in probate investing and partner the deal with them. That way he can learn and earn.

    2Reply
  • David Dey
    Investor · Lakeland, FL · Member since 2015 · 344 posts · 606 votes
    10y
    Originally posted by @Derek W.:

    @David Dey I like the first half of your post, but Do you think that the second part is good advice to a newbie? He is not sure yet how to pull comps, and you think that buying out fractional interest in the estate is a good idea? My advice would be he finds a local expert in probate investing and partner the deal with them. That way he can learn and earn.

     I was not suggesting that he buy fractional interest in the deal, I suggested he do his homework to make sure he wasn't buying fractional interest in the deal.  I apologize if that didn't come across.  I have bought fractional interest in deals before, but only in specific situations.

    I would absolutely agree that he should work with an experienced probate investor.  (Though even most experienced investors might not think of taking the interest of the heir and doing their own probate)  I still put the concept out there so it will help not just our OP, but also others in a similar position.

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  • Clay SmithBusiness Member
    Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
    10y

    In my experience the attorneys I use could walk you through a probate with ease. It does not sound like a flip. So few sqft makes this unattractive to me as a flip. Does sound like a rental. Has to be a 1 or 2 bedroom at 750sqft.

    Just get it under contract. You can always renegotiate afterwards as you discover more things wrong with the property. Someone will buy it cough* cough*

    LREI Property Management LLC4.6449 Reviews
    WebsiteView Page
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  • Account Closed
    Real Estate Agent · Richardson, TX · Member since 2014 · 511 posts · 161 votes
    10y

    @Ryan Redmond If you're not sure about the after repair value, you can get a BPO (Broker's price opinion)from an agent or at the very least a CMA.

    If you want to flip it, just have a GC coming to the property and he can give you a ball park estimate of what repairs need to be done. Given that it is a cheap house, I think it's a great place to start. Just be very conservative with your numbers and you should be fine. 

    The only thing that I dislike is the SQ footage and the fact it's a 2 BD property. 2 BD properties with under 1000 SQ FT are harder to sell in many areas. It will really depend on your market. 

    0Reply
  • Jeff McMahan
    Real Estate Professional · Smithfield, KY · Member since 2015 · 17 posts · 2 votes
    10y

    I agree with Clay Smith!

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Lots of good advice here! And yes, I've confirmed it's a 2 bedroom and it's supposedly paid off. While I believe that to be true, I still have to confirm that for certain though. I understand that small 2 bed/1 baths are typically difficult to sell quickly so I'm also considering the rental option. Since I'll likely be turning my current house into a rental in the Spring, it'd be awfully convenient to own another rental property right next door. However, unless I was to go the private financing route, I simply wouldn't have the capital to rehab a house myself yet. If all else fails, but I can get it under contract and the numbers work, I'll at the very least wholesale it. But going half and half with a probate investor sounds like it might be appealing too. Let no one ever say that the real estate business limits your options, right? haha 

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    First things first- I need to get a hold of the nephew who seems to be the de facto owner. Besides talking to the other neighbors and leaving a note on the door, any good tips on finding home owners in a situation like this? After all, if he's not motivated to get rid of it then this is all just a fun hypothetical. But I suspect he doesn't like the situation he's found himself in and probably wants out. Here's hoping I'm right. 

    I'm also concerned because even if he is able to fix it up and rent it out, I don't want an accidental landlord with no experience choosing my next door neighbors for me, as you all can probably understand.

    0Reply
  • Raun Stout
    Real Estate Agent · Tucson, AZ · Member since 2015 · 7 posts · 3 votes
    10y

    The only thing that would make me hesitate in this situation is if it is a 3 Bedroom/1 Bath. The whole one bathroom thing is something I usually just avoid all together unless you budget for a second bath to be added and valuations can support that.  In AZ it is fairly simple to get information from the assessors office if you find an address different from the physical location of the house you might have a place to start, you can also see if it owned by a Trust which will obviously change the probate aspects

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Well, it's only a 2 bedroom so wouldn't 1 bath be normal? In a 750 sq ft house I'd be surprised if there'd be unused potential for a second bath.

    0Reply
  • Douglas Snook
    Attorney · Attleboro, MA · Member since 2015 · 412 posts · 165 votes
    10y

    As far as getting hold of the nephew, can you check with the town hall and see where they are sending the tax bill and /or water bill etc.. Also try the post office to see if mail is being forwarded. They may or may not give the address (privacy and domestic abuse law issues) but if you give them a letter they may forward it for you.

    I would also drop something in the doorway or mailbox. You might find several others there as well!

    Good luck and keep us posted!

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Thanks for all the great ideas. everybody. I'll be trying some of those ways to get in touch with the guy. And I'll make sure to keep people posted as this progresses (IF this progresses.)

    Thanks again, everyone!

    0Reply
  • Dave Slaughter
    Rental Property Investor · Louisville, KY · Member since 2013 · 47 posts · 8 votes
    10y

    Give me a call Ryan I can help you out.

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Dave, I'm glad you said something because I was actually planning on calling you with some further questions about this. If I can't call today, I'll definitely call tomorrow. Thanks in advance, sir.

    0Reply
  • Ryan Redmond
    OP
    RCS Transport · Louisville, KY · Member since 2015 · 32 posts · 3 votes
    10y

    Well, guys, I tracked down the owner of the property and it turns out that another investor beat me to it. He owns at least 13 properties and a self storage business in my area alone. Well played, Mr. Leroy Fox. Well played. 
    At least I got some good experience tracking down a hard to reach property owner and got to run the numbers on a potential property. Thank you guys for your assistance. 

    On to the next one!

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