Mr. Smarts Posted July 25, 2006 Share Posted July 25, 2006 My realtor let me know about a property for sale priced 55k UNDER hcad appraised value. The house obviously needs some work, but possibly no more than 20k of work(if your an investor you probably have contacts with contractors.) This is in a neighborhood where homes sell for 5-10k above appraised value. And this home is appraised at 108k and has been foreclosed on. Its for sale in the high 50s. I could make a killer profit on it. But I have already committed my money towards another home. Any novice investors been in this situation before? Where you KNOW you could make a killer profit. I could purchase it, invest 20k in it, 5k for interest and taxes, for a total investment of 75k-80k, and sale it for 100k-110k.. UGH!!!!!!!!!!!!!!!!! All before years end. Link to comment Share on other sites More sharing options...
musicman Posted July 25, 2006 Share Posted July 25, 2006 My realtor let me know about a property for sale priced 55k UNDER hcad appraised value. The house obviously needs some work, but possibly no more than 20k of work(if your an investor you probably have contacts with contractors.) This is in a neighborhood where homes sell for 5-10k above appraised value. And this home is appraised at 108k and has been foreclosed on. Its for sale in the high 50s. I could make a killer profit on it. But I have already committed my money towards another home. Any novice investors been in this situation before? Where you KNOW you could make a killer profit. I could purchase it, invest 20k in it, 5k for interest and taxes, for a total investment of 75k-80k, and sale it for 100k-110k.. UGH!!!!!!!!!!!!!!!!! All before years end. You should phone a friend. Should i give you my number? Link to comment Share on other sites More sharing options...
flipper Posted July 25, 2006 Share Posted July 25, 2006 My realtor let me know about a property for sale priced 55k UNDER hcad appraised value. The house obviously needs some work, but possibly no more than 20k of work(if your an investor you probably have contacts with contractors.) This is in a neighborhood where homes sell for 5-10k above appraised value. And this home is appraised at 108k and has been foreclosed on. Its for sale in the high 50s. I could make a killer profit on it. But I have already committed my money towards another home. Any novice investors been in this situation before? Where you KNOW you could make a killer profit. I could purchase it, invest 20k in it, 5k for interest and taxes, for a total investment of 75k-80k, and sale it for 100k-110k.. UGH!!!!!!!!!!!!!!!!! All before years end. 110k - 4% for the realtors = 103,400 103,400 - 20k fix up (can you really only spend 20k?) = 83,400 83,400 - 4,000 (loan interest and points) = 79,400 79,400 - 3,000 (closing costs buying and selling) = 76,400 76,400 - 1,000 (property taxes) = 75,400 75,400 - 1500 (builders risk insurance and utilities) = 73,900 73,900 - 58,000 (price of house?) = 15,900 Profit What if it cost 5,000 more to fix up the house than you thought? What if you have to come off the list price 5,000 to get a quick sale? $5,900 Profit I'm not trying to be a buzzkill but this is what I do for a living, and as anyone who has flipped houses can tell you, this is reality. You also should know that HCAD value has nothing to do with the Market Value. All the best, flipper Link to comment Share on other sites More sharing options...
TAK Posted July 25, 2006 Share Posted July 25, 2006 110k - 4% for the realtors = 103,400103,400 - 20k fix up (can you really only spend 20k?) = 83,40083,400 - 4,000 (loan interest and points) = 79,40079,400 - 3,000 (closing costs buying and selling) = 76,40076,400 - 1,000 (property taxes) = 75,40075,400 - 1500 (builders risk insurance and utilities) = 73,90073,900 - 58,000 (price of house?) = 15,900 ProfitWhat if it cost 5,000 more to fix up the house than you thought?What if you have to come off the list price 5,000 to get a quick sale?$5,900 ProfitI'm not trying to be a buzzkill but this is what I do for a living, and as anyone who has flipped houses can tell you, this is reality.You also should know that HCAD value has nothing to do with the Market Value.All the best,flipperI agree HCAD value has nothing to do with Market Value, but Market is generally ABOVE HCAD, so if it's 55k below HCAD, it might have some value...or a foundation repair...or need an a/cor a roofor been in a firehow's that for buzzkill? i'd be interested in the concept of $55k below hcad, but i'd have to see it and run comps on it. Link to comment Share on other sites More sharing options...
west20th Posted July 25, 2006 Share Posted July 25, 2006 You also should know that HCAD value has nothing to do with the Market Value.Having battled with HCAD for over two years on the value of my property I can attest to that. HCAD value has little to do with reality. Link to comment Share on other sites More sharing options...
TheNiche Posted July 25, 2006 Share Posted July 25, 2006 You also should know that HCAD value has nothing to do with the Market Value.They might've just protested their taxes and done really well for themselves.Find some sales comps and get back with us. It may actually be a very good deal, but HCAD is no way to judge. Link to comment Share on other sites More sharing options...
Mr. Smarts Posted July 25, 2006 Author Share Posted July 25, 2006 110k - 4% for the realtors = 103,400103,400 - 20k fix up (can you really only spend 20k?) = 83,400 83,400 - 4,000 (loan interest and points) = 79,400 79,400 - 3,000 (closing costs buying and selling) = 76,400 76,400 - 1,000 (property taxes) = 75,400 75,400 - 1500 (builders risk insurance and utilities) = 73,900 73,900 - 58,000 (price of house?) = 15,900 Profit What if it cost 5,000 more to fix up the house than you thought? What if you have to come off the list price 5,000 to get a quick sale? $5,900 Profit I'm not trying to be a buzzkill but this is what I do for a living, and as anyone who has flipped houses can tell you, this is reality. You also should know that HCAD value has nothing to do with the Market Value. All the best, flipper Thank you for the input? What areas do you like to invest in? I minimize my costs by using a contractor friend of mine for most of the work. I've easily in the past spent 10k on a house and put in a new roof, flooring, some electrical work, walls and ceilings. Sometimes a little more, sometimes less. All to code. I would never spend retail for construction work, on a house meant for resale. Since between my family and I, we give him a lot of work. I would also only purchase the home if I could get it under asking price. The realtor I work with would give me a break on her fees. But you are right, there is a risk. I've ran numbers on that house and looked up its previous selling price. That same house sold for 103k in 2004. Since it was abandoned a few months ago, with some work it could easily go for 110k now. Easily! The HCAD numbers where just for comparision. What I was saying was that the homes in that area have usually sold for 5-10k above HCAD value. HCAD value was just used as reference. I use that number as a starting point, then compare similar homes final sale price and square footage, among other thing. They might've just protested their taxes and done really well for themselves.Find some sales comps and get back with us. It may actually be a very good deal, but HCAD is no way to judge. true. But HCAD can be used as a comparative tool. Its also good to see how its value has increased in the past 5 or even 15 years. I think its smart to use all tools available to price/buy a home, not just HCAD. Agreed? Link to comment Share on other sites More sharing options...
jm1fd Posted July 25, 2006 Share Posted July 25, 2006 $5,900 ProfitWhile we're parade-raining, don't forget federal taxes on the profit! Link to comment Share on other sites More sharing options...
Mr. Smarts Posted July 26, 2006 Author Share Posted July 26, 2006 While we're parade-raining, don't forget federal taxes on the profit! 1031 exchange. deferred taxes if you reinvest that money. Link to comment Share on other sites More sharing options...
jm1fd Posted July 26, 2006 Share Posted July 26, 2006 1031 exchange. deferred taxes if you reinvest that money. You can defer them all you want but they're still there! Link to comment Share on other sites More sharing options...
TheNiche Posted July 26, 2006 Share Posted July 26, 2006 But HCAD can be used as a comparative tool.No. Never, never, never use HCAD. Many people protest each year in addition to misappraisal.Why would you ever use HCAD if you could use actual sales comps? Do you think that an MAI would use HCAD?Just don't. Link to comment Share on other sites More sharing options...
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