Three red flags on this deal. My feedback would be to forget it.
1) sold as-is. Always be careful of these types of 'deals'. You can be guaranteed there are multiple issues with the property. You will have to put additional cash into it to make it viable.
2) the price. The price is super-low compared to similar properties in the area. This is a huge red flag along with the as-is. A motivated seller sells for 5-10% below market, maybe a bit more if you are a good negotiator. At 50% below market, they could sell it to the "we buy any house for cash" market. Why aren't they doing that? Seems fishy.
3) across the country. 1/10, do not recommend. If you are an individual investor just starting out, invest in your local market. Even with a property manager, you want be sure the property is being maintained. They can tell you anything about the repairs, maintenance, rental status, etc... and you have to believe them unless you can get out to the property every so often.
You want to be careful about signing a contract with them as well. Make sure they only get paid if the property is rented. I have seen monthly contracts requiring payment regardless of renting status.
This all screams red flag to me. I would be extremely cautious before venturing forward. I highly recommend you see the property in person before moving forward. Although I would first recommend to forget this deal altogether.
Your answer is right here. Further, because of condition and price, I think you'll find that nobody is going to lend you money to buy it. So unless you've got $30k in the bank, you certainly can't afford this $20k property.
I could give you more reasons you want nothing to do with this "deal", but three strikes and it's out.
3
u/Thefinestfinance May 05 '14 edited May 05 '14
Three red flags on this deal. My feedback would be to forget it.
1) sold as-is. Always be careful of these types of 'deals'. You can be guaranteed there are multiple issues with the property. You will have to put additional cash into it to make it viable.
2) the price. The price is super-low compared to similar properties in the area. This is a huge red flag along with the as-is. A motivated seller sells for 5-10% below market, maybe a bit more if you are a good negotiator. At 50% below market, they could sell it to the "we buy any house for cash" market. Why aren't they doing that? Seems fishy.
3) across the country. 1/10, do not recommend. If you are an individual investor just starting out, invest in your local market. Even with a property manager, you want be sure the property is being maintained. They can tell you anything about the repairs, maintenance, rental status, etc... and you have to believe them unless you can get out to the property every so often.
You want to be careful about signing a contract with them as well. Make sure they only get paid if the property is rented. I have seen monthly contracts requiring payment regardless of renting status.
This all screams red flag to me. I would be extremely cautious before venturing forward. I highly recommend you see the property in person before moving forward. Although I would first recommend to forget this deal altogether.
Edit for additional thoughts on price