Scratch one investment property.
Running the numbers, it might have still been possible to make it work. But a lot would have to go right, and this particular property didn’t have an especially good track record.We had a plumber come out and look over the biggest problem. He came back with a best case scenario of $5,000. He called this morning with what he thought was a more realistic figure: an eye-popping 15 grand.
Well, there’s a problem. The property easily needs another 15 grand worth of work. And most of it isn’t stuff that a do-it-yourselfer ought to be doing. It was overzealous DIY work that got the house in this mess in the first place.
According to the books we’re reading, we could afford to put $33,000 worth of work into the house, based on what it should rent for. But it’s easy to see how one project going over budget could blow the whole thing out of the water.
And, frankly, doing that much work would cause more debt than I’m comfortable carrying.
We’ll lose some earnest money. But the risks are starting to outweigh the benefits.
We’ve learned some expensive lessons. But at least we’ve learned. We’ve gone and looked at a couple of other houses already. And we noticed things we hadn’t noticed before.
Not only that, in one case we liked what we saw. The question is, how many other people have seen it and liked it too?
"We’ll lose some earnest money."
It’s tuition money for what you are learning. I hope you are using a good Real Estate Lawyer because something this expensive should have been disclosed upfront. Maybe your lawyer can point that out to the seller.
The seller is HUD… The faceless, soulless government agency. I’m actually more irritated right now with the realtor than with HUD. HUD knows 90% of the stuff in its hands is crap. It’s the realtor’s job to recognize crap and stay away from it, not put whipped cream and a cherry on it and call it a bargain.
The Realtor is there to sell you something. The best salesmen are psychopaths. They take your money and run. In my twenty plus years in retail sales, I never rose above average because I couldn’t develop the pathology of a Super Salesman.
Watch your back and do your homework on what you want.