10 types of houses NOT to buy!!

OK, Confused here... most of these make perfect sense, but...

WHY would a "Move-in-ready" house be one to avoid?

And houses where average DOM is over 90 days? I thought those were the kinds of houses to actually LOOK for, as those could indicate a motivated seller?

Much thanks!

I know of at least 1 guy on facebook, who loves moldy homes. I'm not sure why though, other than the fact you can get 'em way cheaper than the typical deal.

Susan,
You can't add value to a move in ready house right? Fix/flips generate equity by improving the property. Does this make sense? Most move in ready properties will go to an owner/occupant buyer way before an investor buyer. Why? They pay more!!

You want to buy a house that has been on the market a long time because of its condition! (junk house in good area) You want fixed up houses in the same area to have low average DOM. Why would you want to try and sell a house where the average days on market is over 90?? Does this make sense?

Dallas,

Love those face book buyers!! Right!! Properties that have had severe mold mitigation can have a negative stigma when it comes time to retail them. Of course you can make money, but you want to have a property that appeals to the most buyers right? This lowers your risk. Not that you can't do a property with any of the problems listed above, you can. Me, I would rather appeal to the majority of buyers with out major structural or mold issues to deal with. Hey, I know guys that like structural repairs too. Does not mean that is for most investors or buyers.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

OH! OK, so this list is more targeted to folks who are focusing on one style/method of real estate right now. My brain automatically saw "Ready to move in" and thought "OK, so that'll be a retail buyer or a cach-flow rental..."

But on the DOM, WHERE are houses selling in less than 90 days right now?
Perhaps my focus is too small. I've been looking in my town, and- well, most of Nevada is sucking mud right now.

You might be surprised at how many sales have taken place in your town or area. Ask your realtor for a list of solds in the last 90 days. Of course it is better to concentrate on larger towns for fix/flipping and wholesaling. Maybe your are is a better lease with option to purchase market.

The last property of mine was listed 1/9/12 and under contract 1/23/12. 14 days on market. The longest we have gone from listing to under contract was 43 days. We were getting worried! What is our selling strategy? Nicest on the block at the lowest price. We had one back in September that had a full price offer in FOUR HOURS!!

Denver is two shakes away from being a sellers market. So a lot of what people say works in this economy does not work here. Or how terrible everything is. Some parts of the country this is true (most parts) however in other parts it is not. Take Florida. The Miami area is expecting another 10% deprecation this year while Ocala is looking at 13% appreciation.

Like I stated in my post. The list applies to wholesaling and fix/flip investors and the property types to avoid.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Thought I would bump this one. It has real world investing information. No cheer leading or motivational stuff. Not Dr. Phil REI. I thought it might actually help some people that are actually going to make offers!

it's a great list- thanks for putting it together!

what about buying the largest house on the block? I've read that it's not a good idea either; that they are difficult to sell and to rent...

The large house can be a problem when it is over priced for the neighborhood. Like a $300,000 house in a $200,000 neighborhood. Buyers of a $300,000 house would rather live in a $300,000 neighborhood. So those types of houses are a problem. Now if it is a large house but in the same price range that can be a positive.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Here in Denver and most places I think, the MAJORITY of home buyers want at least three bedrooms.

Also, what is a "furnished" bathroom and kitchen? Comes with towels and pots and pans? Ha Ha!

If the place has all hardwoods, where would fabrics come into play? Do you mean staged nicely?

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Important to know whether an addition has been added, too. You don't want any permit issues...when purchasing.

Great point! Always check the permit history on houses that have additions!!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Sometimes you can make a lot of money if you buy a mixed use property when a residential area is being changed to commercial.

Your example does NOT apply to doing a fix/flip. It is also VERY much the exception!! Needle in a haystack type of thing. Developers with very deep pockets are all over properties like that.
We are looking for properties that the highest percentage of owner/occupants will want after we rehab them. So your response does not apply. Different type of deal and buyer!! Not that what you said can't happen however!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

As for a fix/flip situation it would be very hard to sell a property like that.

You would have to get VERY lucky to fall in that situation Julie stated.

Hi Michael, Thanks for sharing this and starting this thread. Useful information here!

Cris

Just to let you know I appreciate when you and other investors on here go full circle to educate new wholesalers. A post that I read earlier when reading up on proof of fund was you going on about learning to evaluate deals and be able to understand getting one under contract is more important than finding buyers. Then, only to come across this helpful tread when I'm trying to study evaluations... Great work my friend!
This is going to setup things nicely for when I go network with my newly found RE agents and investor group tomorrow.

Happy Investing