Author Topic: Property in my town - opportunity  (Read 1287 times)

MrSal

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Property in my town - opportunity
« on: August 06, 2016, 10:03:33 AM »
So, in my town I just came across what can be an opportunity ...

Just came from viewing, a 1600 sq foot house ... it looks like its a REO from either Freddie Mac or Fannie Mae. The owners passed away and no estate was found... I talked to some neighbors and the house has been empty for about 5 years.

It needs a lot of work, down to studs it seems but it has potential. I can do a lot of the work in the house with some help.

Roof looks ok actually looks newish ... no mold nor black spots in insulation from what i was able to see.

It would need new eletrical as well most likely.

Half doubles in town get around 900-1000 USD for rent. SFH around 1250 USD. This one has a 5 bedroom and 1550 sq feet. Acreage of the lot is .14 acres.

Property taxes including the school tax are around 1500 USD/year

Comps in the area are about 180k for the houses nearby that are similar

They are listing it at 64900 as is ...

My question ... if I am to make an offer... since this is Freddie Mac and Fannie Mae ... could i low ball them or not? if its listed at 64900 I assume its obtainable in its mid 50's? maybe even less? the house has been siting for a while...

Do you have any experience with it?

EDIT: This would be my first purchase in the US other than my actual home i currently live in. It would be an all cash deal ... I do have the funds available. Eventually after the rehab is done i would like to refinance it in order to have additional funds for downpayments on other opportunities.

By being my first purchase in US I really need to have a very good due dilligence. My next door neighbour which we do get along very well is a professional realtor so maybe i can ask him to guide me through all details in terms of legalities and such.

Any feedback would be welcome in terms of numbers ... help... etc.

Thank you

EDIT2: Also not sure... if I buy it... should it be under my own name or should i create a LLC of some sort? I know a corporate entity would probably be best however, i know there are some special tax treatment for houses that you can defer eventual capital gains if you hold them indivudally? or be exempt all together? any input would be greatly appreciated.
« Last Edit: August 06, 2016, 10:05:38 AM by MrSal »

Another Reader

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Re: Property in my town - opportunity
« Reply #1 on: August 06, 2016, 11:11:44 AM »
Ownership is likely public information and may be on-line.  Get the price history and the date and amount of the most recent reduction.  In my experience, Fannie will accept a price about 5 percent under list and reduce the price 5 percent every 60 days or so.  There are not many Fannie properties in the Phoenix area any longer, but this still seems to hold true.  I have not dealt with Freddie.

MrSal

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Re: Property in my town - opportunity
« Reply #2 on: August 06, 2016, 11:23:30 AM »
Ownership is likely public information and may be on-line.  Get the price history and the date and amount of the most recent reduction.  In my experience, Fannie will accept a price about 5 percent under list and reduce the price 5 percent every 60 days or so.  There are not many Fannie properties in the Phoenix area any longer, but this still seems to hold true.  I have not dealt with Freddie.

The last reduction price was yesterday ... dropped it 5k to 59 900 now. However, the house has been siting on alone for 5-6 years according to neighbors ... so it needs some love. Like Romeo and Juliet love.

So 5% under listing would bring it to about 57k ... i mean the numbers are so low now that % wise 5% becomes very small... maybe thats why they are reducing in 5k chunks?

Another Reader

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Re: Property in my town - opportunity
« Reply #3 on: August 06, 2016, 12:04:50 PM »
When did Fannie/Freddie acquire the property? How long has it been listed?  Have you been in it yet? You will likely have to have an agent to buy it, so you might as well get one to show it to you.  Never hurts to try a low offer, but they can be stubborn if they just reduced it.  I might wait three weeks and offer $50k, after I had seen it, of course. 

Blindsquirrel

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Re: Property in my town - opportunity
« Reply #4 on: August 07, 2016, 09:50:15 PM »
  Lead with a solid offer and see what they say. Worst they can do is say no, or we have multiples and give us your highest and best. Sounds like a good deal.

ShoulderThingThatGoesUp

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Re: Property in my town - opportunity
« Reply #5 on: August 10, 2016, 02:37:45 PM »
What happened, MrSal?