OfflineAn article this week at MSNBC.com is titled “Bust leaves market littered with homes under $10,000.” There are buyers enjoying rock-bottom prices in many areas around the country, and this article pointed out a few examples.
Orlando
A real estate broker took a lunch break and closed on a four unit apartment building. In better times, this building sold for $120,000. His closing purchase price was $25,000.
Cities and Number of Homes For Sale for $10,000 or Less
• In 10 of the largest real estate markets, there were at least 100 homes listed at $10,000 or less.
• Atlanta – 234 homes
• Chicago – 165 homes
There are $19,000 condominiums in Orlando, and multiple listings under $10,000. A great story was about a 14 year old girl who saved enough money to buy a rental property in Florida for $12,000. In hard-hit Detroit, Realtor.com reports that there are more than 3300 homes for sale for $10,000 or less. It’s not all easy pickings for investors though. Many of these properties, even just the land, aren’t currently worth even the tiny price they’re asking.
The number of homes listed at $10,000 or less has risen over the past year in 22 of the 146 metro areas examined by Realtor.com, with examples:
• Fresno, CA from 7 to 17 homes
• Wichita, KS from 35 to 50
• Greensboro, NC from 18 to 33
• Los Angeles from 10 to 18
While 17 cities still had at least 100 homes available for $15,000 and under in February, the number of listings in that price range declined in 16 of those markets since last year:
• Atlanta from 1249 to 595
• Chicago from 847 to 306
• Detroit from 5092 to 3334
Our real estate broker example apartment building is expected to yield a 25% to 30% return on investment with total rents around $2000 per month. The building is being repainted and repaired and there are waiting tenants.
I have come accross many houses that are selling for less than $10,000, but I had to pass on them; reasons being, for one, the rehab on these properties can cost more than what the properties are worth... way more...
two, some of these houses are in areas where even your property manager won't go to collect your rent.
three, some of the HOA for the condos can break your monthly budget, so always check for those
So basically, make sure that you do your due diligence before you buy one of these bargain houses... but do keep your eyes and ears open, because there are some true bargains out there!
wishing everyone success,
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
Where are the best places to look for these bargain homes, if any, in my area? Newspapers, MLS, etc? I am in the Dallas area, and new to investing. Anyone hear of those bargains around these parts?
At least 2 or 3 dozen. Up to 2 or 3 thousand or more. On top of doing your due diligence, however, there are some other factors that truly KEEP many of these devalued and unpurchased even by wannabe investors who may take the "Fire! Ready! Aim!" approach. They let the bargain basement price lead them into perdition. They include, but are not limited to:
1) Environmental issues: Lead, Asbestos, Used Oil, Sewage/septic leeching and discharge, stray pets and wild animals, basically anything you can think of that would take a half dozen permits and more money than the land and house COMBINED are worth to clean up. The land and/or building may not even be approachable due to contamination, but because no one's spent the money to do an environmental inspection, no one knows it yet. An economic bomb waiting to blow up on the 1st sucker to buy it.
2) Location, Location, Location!!: If there are blocks of skidrow houses surrounding your "deal of a lifetime," it doesn't matter how great you make that one. No one will notice, no one will buy it, and someone will be by soon enough to strip and vandalize it back as awful as it used to be.
3) City Property, City Problems: Homeless people, squatters, drug dealers, juvenile delinquents, gang bangers, etc., etc. LOVE these type of houses so they can do what they do best - commit crimes. Either against the property itself, or in the property. Strip out everything with any type of value until it's a ruined shell, and they'll still have a place to do anything they want.
4) Other assorted "turnoffs": Does the front window face someone else's brick wall? It might! Is it even a legal address, or an illegal building built without a permit? Is it zoned correctly? Landlocked? Unable to obtain necessary easements? Was it wired illegally by a cheapskate who knew nothing about wiring? Hidden or unknown liens that pop up after you bought it?
There are a ton of other things that keep places like this on the market for years, even decades, without even a single call asking about it. If you're not willing, able, and backed up well enough to buy an entire street or neighborhood all at once and "flip" it, focus on the periphery where the "good" neighborhoods start to get a tiny bit "shady" (but not violent). A big clue is if your agent, contractor, etc., won't go near it without a bulletproof vest - it may not be the deal it appears to be.
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
To buy the property in the City's name, condemn and bulldoze all buildings, then hold onto the land and wait for it to appreciate. But even these city reclaimant programs are having limited success because it costs the city big money that may take them years, or never, to get back. Sorry to sound so negative, but it is what it is.
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
Hey Valerie,
Very good points to ponder, we must all apply our due diligence also thank you
Admin for keeping us updated on current market trends.
Thanks all,
Denver
"Do, or do not. There is no 'try'"
------Yoda
Think, say and do what is right; refuse to think, say or do what is wrong.
I Live and invest in the Pac NW and recently have started branching out.
About a month ago I started up with a guy who had 13 properties in Flint MI.
They averaged right @ $12k each and he said they were all rented.
Turned out to be the worst areas in Flint which is a pretty depressed city anyway.
My first inquiries into property mgrs in the area didn't go well so I backed out.
So like Valerie says they r out there, but REALLY do your due diligence on these properties.
Just this morning, I had a buyer coming to town and he's been trying to buy three props to get started here. Anyway the market in the under 50's has tightened up in the last 2 weeks and of my over 100 active offers I was having trouble having getting a deal accepted at an acceptable price for him.
I ran a search for non-SS, across the valley under $35K.
It came up with around 25 props. But after I filtered under 1,000 sf, ones I already have offers on and ineligible Homepaths (not open to investor offers yet) the list was down to 8. I placed the offers and let the buyer know I'm on it!
Cheap is relative and under $35's are few here. Under $50's still provide a very large number-- I can't quote the total because I section it off, but there are probably around 800 or so. And yes, some are in very bad shape-- most have substantial deferred maintenance, but nearly every one has a good enough spread, IF I can get it for at least 70¢/dollar less repairs. My buy range is still 20-53¢, but that is climbing a bit at the moment.
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
and they were probate auctions, that was the teaser listing price... but I have seen them in other states and areas. They just didn't check out to be what I wanted to invest in.
i live near FRESNO CA so im going to keep my eyes on this "bargain deals" I have yet to see any house under 30k in my town though.. thats can be a good thing i guess.
yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called the "present."
"Be not afraid of growing slowly; be afraid only of standing still"
Due diligence is needed on all purchases, but homes under $10,000 and even under $25,000 depending on the area require so much time and effort!! I find that 99.99% of the time it is well worth it but the most difficult part after buying the piece of lego is working with the city inspectors!! Many of these homes are priced so low for a reason. Sometimes just trying to get them off the condemnation list is near impossible and the money the city inspectors demand will bankrupt you!! I usually get the address and take a picture with my phone and go down to city hall and speak with the city official who condemned the building and I briefly explain to him oe her that I am a real estate investor and that I am interested in this property and would like to know the specific details about how to get this home off the condemnation list. City inspectors love real estate investors if you approach them and don't try to do anything sneaky. I have found that using this strategy has paid off for me abd has help me. If the banks know that the property is condemn you will even get it cheaper. Everyone knows that a condemn building is not fun and if the price is right and the inspector who condemned the building can you tell you the reason why and how to get it off the condemnation list then it is worth it. I have bought many properties this way and it has been extremely profitable!!!
Raymond
Oh, yes! The hidden costs and time costs of municipalities, ugh!
I had one (a 2600sf ARV $130K) that closed the day after New Year. The Friday before New Year, we found out the house was scheduled for demolition by the city!
What I day that was-- we had to STOP the demo order, etc., etc.
All worked out okay-- the issue in this was unpermitted additions that had been sited and never responded to by the bank.
I purchased it for $34K, passed it to a Flipper for $37 (because he bought two from me at the same time), helped him with the city and he went on to fix it and should be selling it any day now for a nice $25K+ net profit.
-Tina
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
Tina1,
I have always watch the Vegas market since the 2004-05 bubble in and around Henderson which was a great market at the time if you did not hold on to properties to long. Which I did not.
The market died in the "Vegas area after that, but I am seeing a surge now in those same areas. I have talked to a couple of students that have mentioned they now have competition on homes for making an offer and they are getting close to asking price.
Maybe you could shed some light on that for me. I to have an investor that is looking in your area from California.
Thanks,
Randy Bailiff Dean Graziosi Real Estate Investment Coach