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So, there is a house beside me that two idiots bought in 2006 with 100% financing as a rental. This is a 2600 sf house that has default high end finishes like granite countertops, wood floors, high level carpet, etc. When we went to pick out the finishes at the builders design center, everything was already the highest level included in the price. Not your typical rental home.
So, they have rented it to several tenants over the last 6 years, 2 or 3 of which left owning thousands in rent and caused lots of damage. One of the partners does not mind telling me of all his tribulations and financial details. Looks like they have lost at least $10,000 in potential rent, had about $5000 in damages and spent a few grand on legal fees.
Now they are ready to be out of it. They have had it on the market for about 6 months for a price that is probably reflective of the market, though a bit on the low end. Unortunately since they are idiots, they did not fix all of thelatest damage before they putnit on the market. Nothing major, but some pieces of siding that came off a few years ago, some rot on a exterior door frame, wall damage and carpet. So, lots of people saw the house for worse than what it was and bid low. They had a contract, eventually had to fix the stuff anyway and were selling it for less than they wanted, but the deal fell though. According to this same guy, they we're going to have to come up with $20k each to get out.
Now, they are evidently trying to short sell it, judging by the sign they posted on the front door begging someone not to change the locks due to a short sale pending. So, I'm guessing they are no longer paying the mortage either.
So, to get to my question, would it be possible for 4 or 5 of us that live nearby to form an LLC and buy the house for the highest price possible assuming we could get an appraisal, sit on it a few years and rent, even if we collectively lost a little bit due to rent not covering the note? We'd use a professional company probably and I am confident that we would do a better job picking tenants as the current owners do not speak English as a first language and that hurt their selection process. (that and not doing background checks, these guys should have just wrote a book on how not to be a landlord)
Factoring into this is the fact that we have not been hot with too many nearby shorts or forclosures and pretty much the rest of the block is stable. It would really suck after dealing with their crappy tenants, to get spanked by these guys on the way out and take the value hit for years down the road when things are just starting to do better and our neighborhood never really had a real run up in prices.
Do you really think one short sale is going to impact values that much and what happens if another house in the area goes to short sale? If there are that many of you going in could you buy it with no financing?
So, there is a house beside me that two idiots bought in 2006 with 100% financing as a rental. This is a 2600 sf house that has default high end finishes like granite countertops, wood floors, high level carpet, etc. When we went to pick out the finishes at the builders design center, everything was already the highest level included in the price. Not your typical rental home.
So, they have rented it to several tenants over the last 6 years, 2 or 3 of which left owning thousands in rent and caused lots of damage. One of the partners does not mind telling me of all his tribulations and financial details. Looks like they have lost at least $10,000 in potential rent, had about $5000 in damages and spent a few grand on legal fees.
Now they are ready to be out of it. They have had it on the market for about 6 months for a price that is probably reflective of the market, though a bit on the low end. Unortunately since they are idiots, they did not fix all of thelatest damage before they putnit on the market. Nothing major, but some pieces of siding that came off a few years ago, some rot on a exterior door frame, wall damage and carpet. So, lots of people saw the house for worse than what it was and bid low. They had a contract, eventually had to fix the stuff anyway and were selling it for less than they wanted, but the deal fell though. According to this same guy, they we're going to have to come up with $20k each to get out.
Now, they are evidently trying to short sell it, judging by the sign they posted on the front door begging someone not to change the locks due to a short sale pending. So, I'm guessing they are no longer paying the mortage either.
So, to get to my question, would it be possible for 4 or 5 of us that live nearby to form an LLC and buy the house for the highest price possible assuming we could get an appraisal, sit on it a few years and rent, even if we collectively lost a little bit due to rent not covering the note? We'd use a professional company probably and I am confident that we would do a better job picking tenants as the current owners do not speak English as a first language and that hurt their selection process. (that and not doing background checks, these guys should have just wrote a book on how not to be a landlord)
Factoring into this is the fact that we have not been hot with too many nearby shorts or forclosures and pretty much the rest of the block is stable. It would really suck after dealing with their crappy tenants, to get spanked by these guys on the way out and take the value hit for years down the road when things are just starting to do better and our neighborhood never really had a real run up in prices.
Or am I just being stupid?
Of course you could do it. Whether it is a good idea or not, that is a whole other topic. FYI-this one house is not going to affect your street's values for 'years down the road'. Probably best to let nature takes it's coarse on the property and hope that the new owners are good neighbors.
...Now, they are evidently trying to short sell it, judging by the sign they posted on the front door begging someone not to change the locks due to a short sale pending. ....
Well, first you need to find out the current status of the home. By "short sale pending", do they mean they have a signed purchase contract and are waiting for their bank to approve? If so, you may be too late to negotiate a different offer. Or it may just be a ploy to ward off the bank from changing the locks. Suggest you get your own agent to check it out, or talk to their listing agent if they have it listed for sale.
I personally would not because you can also be a victim in a very short time as well. I never found purchasing a home with several owners to be a good idea. I have done this and round up being the only owner. Good luck if you choose to do so.
One issue...if any one of the owners wants to sell next year (maybe they are getting a divorce or lost a job or moved out-of-state), then y'all would either need to buy out their portion or sell and then split proceeds. Neither of these is a simple process when you have several other owners.
The more people that own this place, the more possibility that someone wants out even though they don't anticipate it at this moment.
So, in a bunch of houses that should be worth $300-330k, one selling for $250-260 won't affect our values? I'd love to think that but our neighborhood is so small, 130 homes, there just are not that many sales.
In general, this thread has pretty much echoed every misgiving i already had about it.
So, in a bunch of houses that should be worth $300-330k, one selling for $250-260 won't affect our values? I'd love to think that but our neighborhood is so small, 130 homes, there just are not that many sales.
In general, this thread has pretty much echoed every misgiving i already had about it.
Let's assume it would have an impact. What are you going to do if there is another short sale?
I agree with the others this all around doesn't sound like a very good idea. Most areas also do not count foreclosures or short sales for comps for home value. Plus if you are in a nicer area and the house does go into foreclosure, the flippers likely will be all over it to fix it up, and resell at a higher price that will count for a comp value.
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