3 Vancant Townhomes for sale in a distressed area. Whats your opinion?
Riding around the city, I found three townhome properties at great prices. The properties are in a low income neighborhoods near a thriving downtown area. Each property contains 3 bedrooms, 1.5 bath, and a full basement. However, each property needs TLC. I have an uncle who used to fix up properties and rent the property out to section 8 tenants. I’m currently thinking of doing the same. I will be calling the realtor tomorrow to inquire about the property but I would like some advice/opinions. This would be my first investment property. What do you suggest I do before looking into investing? And, what advice could you give me to start out in the right direction? I was thinking about just starting out with one townhome to see how it goes. What are your views?
I think buying anything cheap as an investment can be a potential gold mine (as long as it’s not somewhere out in the sticks).
Even if the townhouses you are looking at are cheap, I would still try to undercut the realtor further. Take a look at the houses again, and make a note of all the imperfections, and all the things that you would need to spend "so much money" on to fix, etc. If you confront them with a huge list (but dont become too petty), they usually try to persuade the owners to sell cheaper – MUCH cheaper, depending on how reasonable your selling requirements on the owner(s) are, and how quickly you are willing to take the house over.
Once settlement is finished, I would get to work right away, as every day you have a house without tenants, the more the mortgage costs will start to burden you. Look around at wholesalers of bathroom products (if the bathroom is in need of renovation) – you’ll find much better deals there, than if you buy your plumbing from a shop. Instead of re-flooring the house, buy cheap second hand carpet (as long as it LOOKS clean, right?). As this would only be an investment property, dont go over the top with renovations & TLC.
Once everything is at an ‘amicable’ standard, I would even think about renting each room out, rather than renting the entire house out. You make more $ that way. You can advertise the house as a ‘student’s dream’ – great bathroom facilities, close to transport, etc. In ‘cheaper’ areas, you have the potential to make a much bigger profit by renting rooms than an entire house.
Good luck!
October 1st, 2009 at 12:25 am
I think buying anything cheap as an investment can be a potential gold mine (as long as it’s not somewhere out in the sticks).
Even if the townhouses you are looking at are cheap, I would still try to undercut the realtor further. Take a look at the houses again, and make a note of all the imperfections, and all the things that you would need to spend "so much money" on to fix, etc. If you confront them with a huge list (but dont become too petty), they usually try to persuade the owners to sell cheaper – MUCH cheaper, depending on how reasonable your selling requirements on the owner(s) are, and how quickly you are willing to take the house over.
Once settlement is finished, I would get to work right away, as every day you have a house without tenants, the more the mortgage costs will start to burden you. Look around at wholesalers of bathroom products (if the bathroom is in need of renovation) – you’ll find much better deals there, than if you buy your plumbing from a shop. Instead of re-flooring the house, buy cheap second hand carpet (as long as it LOOKS clean, right?). As this would only be an investment property, dont go over the top with renovations & TLC.
Once everything is at an ‘amicable’ standard, I would even think about renting each room out, rather than renting the entire house out. You make more $ that way. You can advertise the house as a ‘student’s dream’ – great bathroom facilities, close to transport, etc. In ‘cheaper’ areas, you have the potential to make a much bigger profit by renting rooms than an entire house.
Good luck!
References :
Coming from a family who makes their living from investment properties…