Making More With House Rehabs
What’s the lowest price you can find for a home on the market in your area? $30,000? $10,000? $1? If you live in the Rust Belt, or even some of the newer communities that overbuilt in the boom years and are now suffering, you’ll find some great buys right now.
A Realtor.com search of the Chicago area shows over 150 homes, condos, and multi-unit buildings for $10,000 or less. Detroit has more than 3400 available for under $25,000, and some even as low as $40. Minneapolis has over 130 available for $7,000 to $30,000. In Cleveland you can find some nice little places for under $20,000. There are even 520 homes with a starting auction bid of one dollar!
Common characteristics are that most of these homes are bank owned. The banks tend to be more anxious to get these properties off their books than they are to make a dime on the assets. Because of the low, low prices and the need for speed, many are all-cash deals.
A significant portion of these homes require some serious rehab work. Many of these are complete burn-outs that are going to require a full gutting. A lot of times liens, real estate commissions, and all required permits and fees have to be paid by the buyer. The buyers must do some complete due diligence to get inspections, surveys, and all other work before they sign anything permanent with the bank. Sales in the price range are always ”as is.”
Local factors might come into play with these sales. For example, most of the 33 listings between $10,000 and $30,000 in the Cedar Rapids, IA area happen to be located in areas that were flooded recently. The house might be in a ”tear down” area, and you would have to find out how quickly the city was going to finish their work on the area. With these sales, the policy is ”let the buyer beware.”
Most of the listings between $20,000 and $39,000 in Cape Coral, Florida are located in an area of the city that is going to be assessed $25,000 for city sewer and water services. The homes in this area might not need serious rehab, but the assessment becomes a factor in determining the true cost of owning the home in that part of town.
The Housing and Economic Recovery Act of 2008 and the American Recovery and Reinvestment Act of 2009 both include several billion dollars to be spent on the rehab of blighted areas, especially in areas where foreclosures had been especially brutal. Over $4 billion of the Neighborhood Stabilization portion of the 2008 bill have already been distributed to the cities that needed it the most.
Local Investors can’t expect to receive individual grants from these programs, except possibly from other portions of the American Recovery and Reinvestment Act that related to making energy efficiency upgrades to low income housing. Investors may benefit indirectly if they accept Section 8 clients as tenants. More money under these emergency programs will be available in order to get more individuals below the poverty level into decent housing through Section 8.
Non-profit organizations and some cities might offer grants to investors in order to encourage them to purchase foreclosed or houses in need of rehab. Your local Housing Authority will have information for the options in your market.
Want to find out more about property investing? Then visit master real estate investor Bob Massey’s site and sign up to get a free copy of his eBook and his receive his email news and advice column that will teach you how to invest in real estate.
