How dumb is this?

**Nishu** · 09-16-2011, 10:26 PM

So you guys might have read the thread that I started aways back about a house in my hometown that I might want to buy. Doesn't look like that's going to happen, but I'm thinking that's probably for the best.

Since we decided to put in an offer on that house, I've been looking around at some of the places around my hometown and geez, are they going for cheap. There's several small places out there that I can probably nab for 10k each. Foreclosures, mostly.

I'm sooo tempted to buy one just to try to resell. As bad as the economy is, people still need places to live. Even if I can't sell it through the traditional route, I can sell it on contract and still make a long term profit with a steady stream of income for the next however many years. Worst case scenario, I end up with a house that's worth as much as I put into it.

So, what you do think?

**sinopa27** · 09-16-2011, 10:52 PM

Have you thought about renting out the house you buy?

If they cost 10,000, you may be able to offer them less and get it even cheaper!!

**Libby** · 09-16-2011, 10:59 PM

With the way the economy is going - I'd pass on buying it unless youre going to live in it. A house is a huge thing to try to sell later on down the road, especially from distance.

**Nishu** · 09-16-2011, 11:02 PM

Originally Posted by sinopa27

Have you thought about renting out the house you buy?

If they cost 10,000, you may be able to offer them less and get it even cheaper!!

I'm not really interested in being a land lord. If I sell the house on a contract, I'll get the benefit of the monthly payments without the responsibilities of being a landlord. And the 10k is already assuming I offer them less.

There's quite a few foreclosures in the 15-20k range.

**McD** · 09-17-2011, 01:18 AM

I don't know how it works, but if the buyer on contract starts defaulting on utilities etc, the property can have liens placed against it. I assume you then have to foreclose on the buyer and you assume the liens, etcs.

**sinopa27** · 09-17-2011, 01:21 AM

Originally Posted by McD

I don't know how it works, but if the buyer on contract starts defaulting on utilities etc, the property can have liens placed against it. I assume you then have to foreclose on the buyer and you assume the liens, etcs.

then there are all the legal fees that go with it.

**khaski** · 09-17-2011, 02:45 PM

They're so cheap because no one is buying...NOT a good time to try to 'flip' a house! I would skip it unless you have the $ to keep it 1-2 years if needs be if you can't sell it...but of course it would cost you more and cut into your profits. if they aren't moving quickly at $10k or so, what makes you think it might be profitable to buy it and then try to sell it for more?

**Russ** · 09-17-2011, 04:20 PM

My concern is vandalism. Nobody living there is an invite IMO.

**Nishu** · 09-17-2011, 04:42 PM

Originally Posted by khaski

They're so cheap because no one is buying...NOT a good time to try to 'flip' a house!

People keep saying that but I don't get the reasoning. If you're going to try to buy low, it doesn't make sense to wait until you're competing with a ton of other buyers.

I would skip it unless you have the $ to keep it 1-2 years if needs be if you can't sell it...but of course it would cost you more and cut into your profits.

I do, but I don't think it would come down to that. Like I said I can sell it contract for deed, worst case.

if they aren't moving quickly at $10k or so, what makes you think it might be profitable to buy it and then try to sell it for more?

There's a couple reasons. For one, banks tend not to deal in mortgages for the amounts that I'd be paying. My own bank doesn't do mortgages for less than 50K. I think they also want the houses they finance to be in good condition. The last place I tried to buy, the financing fell through twice for other buyers because the bank wouldn't finance it in the condition it was in. I have cash to offer. /shrug

**mh3rdwheel** · 09-17-2011, 07:19 PM

Originally Posted by Nishu

People keep saying that but I don't get the reasoning. If you're going to try to buy low, it doesn't make sense to wait until you're competing with a ton of other buyers.

I do, but I don't think it would come down to that. Like I said I can sell it contract for deed, worst case.

There's a couple reasons. For one, banks tend not to deal in mortgages for the amounts that I'd be paying. My own bank doesn't do mortgages for less than 50K. I think they also want the houses they finance to be in good condition. The last place I tried to buy, the financing fell through twice for other buyers because the bank wouldn't finance it in the condition it was in. I have cash to offer. /shrug

Nishu if your heart is set on this, then go for it. I think that if you make them pay enough of a down payment to cover say the $10,000 then no worries. when we bought a house on a land contract years ago we went thru a lawyer who specializes in this, he did all the work for us and drew up a contract.

**Greebo** · 09-19-2011, 08:19 AM

You mean flipping the house.

For 10k I assume a LOT of work is needed. Question is, can you buy it for 10k, fix it, and make a profit?

If they're selling for 10k just how much profit do you think is there to be made?

**Nishu** · 09-19-2011, 10:12 AM

Originally Posted by Greebo

You mean flipping the house.

For 10k I assume a LOT of work is needed. Question is, can you buy it for 10k, fix it, and make a profit?

If they're selling for 10k just how much profit do you think is there to be made?

Not too terribly much. This area has low property values anyway. These houses cleaned up and repaired would be 50-60ish. And they actually aren't listed for 10k. There's several of them in the 15-20 range. I'm just kinda guessing what I can get them for.

**Greebo** · 09-19-2011, 10:15 AM

Well, buying for 10-15 and selling for 50 is a great return on investment but it doesn't leave you very much room for error. If the property you buy cant' be fixed up and made worth 50k for 5-10k tops you run a real risk of losing money.

**Nishu** · 09-19-2011, 10:23 AM

Originally Posted by Greebo

Well, buying for 10-15 and selling for 50 is a great return on investment but it doesn't leave you very much room for error. If the property you buy cant' be fixed up and made worth 50k for 5-10k tops you run a real risk of losing money.

Yeah that's true, but if I mess up and can't sell the place for any more than I put into it, I'll still have a house near my hometown which I would also be cool with.

**Greebo** · 09-19-2011, 10:33 AM

Originally Posted by Nishu

Yeah that's true, but if I mess up and can't sell the place for any more than I put into it, I'll still have a house near my hometown which I would also be cool with.

As long as you can pay cash for it, if that's a risk you're willing to take, and as long as doing so and having it go south won't break the bank, sounds like acceptable alternatives then.