Got a cute little 450 sq ft, 1 bed, 1 bath house I picked up on the tax sale. Still working to quiet the title, which attorney says should be done by April 1st.

We've held off doing any real work to it other than boarding it up. Some homeless folks were living there, so didn't have much choice. I'm "all in" to it for just under $5,000 right now, including the taxes, legal, etc.

So I've got to decide what to do with it now: fix it and hold for rent, or flip it "as is". I think "wholetale" it would sell for around $9,000 - $10,000 "as is."

If I fix it...costs unknown. My GUESS is $15,000. The inside is very rough, although I don't think we'd have to gut to the studs. Walls seem solid. Roof appears ok, except the cover over the front porch is sagging and would have to be lifted and shingle reset or replaces. Maybe 1 square of work. Plumbing is probably shot completely. Electric, unknown. Never had it on. Has breakers, and no one has stripped the wire as far as we can tell. Floor is bad: would have to redo sub floor in 1/2 house and coverings in the whole place. New paint of course. Ceiling appears fine. Some genius put up OSB and painted it white. Actually doesn't look half bad for a cheap rental....although seams are very visible.

Heat is unknown. It was central heat and air, but someone walked off with the condenser unit. Not sure how much else is left. Need to send someone to crawl under it.

Foundation is mortar & rock, which is leaning outward slightly on one side. I'll have to get someone to estimate that for me as I have no clue.

Anyway, if I'm close to correct, "all in" (hired work) would be around $20K. I think it would rent for $425...maybe $450. Don't ask me ARV. I don't play that game. Although if I were to guess based on similar MLS listings, maybe $25K-$30K all fixed up market value? So not much value gain. It would be all about the cash flow. Assuming I get 50% of rents to pocket (no debt service), I'd have all my cash back in about 7 years and it should be a solid house for many years to come if I rehab it right.

What would you do?

That sounds a whole lot like our first rental purchase, back in 2010. We bought a 480 sf 1/1 from a burned-out landlord for $7k. We overpaid, but it got us started. :P Our renovation was probably about $10-$15k as well...

The hard part was the hot water heater-- you had to squish past it to get into the bathtub. We couldn't find anyone willing to install a tankless hot water heater, and so we ended up sacrificing the only closet in the house. So if you have good hot water heater positioning and a dedicated closet, you're better off than we were. :)

For ours, it generally turned over about twice a year. The last tenants were there for 20 months, and probably would have stayed longer, except they were having a baby and needed a bigger place. I genuinely expect the current guy to continue being there five years from now. But for a long time, that sort of house would attract people who needed a place to rent for about six months while they got their feet on the ground and their resources collected, and then went on with life. Occasionally, I had people in that I thought would be nice and solid-- the people who wanted a neutral retreat for their autistic daughter, or the airlines retiree who was just looking for a quiet, affordable place to live. But then life always happened-- the mom would get cancer, and so the extra resources got diverted for medical treatments, or the retiree's parents had medical issues, and needed him to be geographically closer. That kind of stuff.

If I had a satisfactory monthly cash flow right now, I'd do minimal work and flip it.

If I wanted long term cash flow (but little appreciation), and I could fix it wholesale, I'd likely fix it and rent it. If I had to pay mostly retail to get it fixed, I'd just flip it.

I think there's a good return to be made on these type places by doing a "pre-hab". This would include all trash removal, mow yard, trim trees, take out anything that would need to come out anyway. One weekend with a couple min wage helpers and use your scrap trailer to the dump. If you have any left over paint, spray only the side facing the street.

That's it.

Doing this little bit will cost maybe $500 and likely increase your flip price by $1000-2000. A good return for minimum effort.

It may be time to unload it as is, don't spend money on it. This house the hidden things will eat up your profit. Unless the attorneys cost to clear title is reasonable and then you can flip it then its worth it to flip it and make some money on it. Consider having another set of eyes look at it. A home inspector that you trust and know he or she is good as a home inspector. HOWEVER that being said you will have to disclose all the issues on the home inspection to a prospective buyer.

Flip It!!! Save the headache of increased and continued repair costs. The Money Pit!!

Those repair costs seem to always be more than estimates.

The bulging foundation is the first thing I'd look at, and I would decide based on that.

If this house were fixed up and on the market for $25K, would you buy it as a rental?

Given the difficulty of finding reliable, affordable contractors these days, I'd wholesale it, take my $4-5K profit and buy another one.

What is the neighborhood like?

If not bad, with all you describe, would you be better off bulldozing it and building a new 2/1 or 3/2? Cost to tear down and haul off is probably $6-8K.

Does city code allow you to bring in a tiny house and hook it up to power and water? Even a used mobile on the single lot?

Trying to be creative here.

Ask the Local Fire Department if they would

like a place to Practice Burn. (Training)

Level, add a Big Garage and get the Band back together.

SID

I remember looking at that one with you. Didn’t it have a bonus room up the skinny stairs? And I remember you making a comment about just let the drunk try running his fist through THAT wall. HaHa.

I can’t tell you what to do cause your market is different than mine. Also your desires are different than mine. You are young enough that you are still in the acquisition years and I am in the escape years.

However I have talked to you that on my little places like that I usually try the “Rent to Own”.

Have one very similar over in Pierce City. I am a lot cheaper than you are you money bags you (grin). I had talked to the neighbor and told him that I had gotten the house and was going to rent it or sell it. Shortly after a couple came and told me the neighbor had mentioned to them I was trying to do something with the house. Yep, sure am.

We sit and talked for a while. Came down to they were interested in buying it. I told them to give me a price they were willing to pay but if they are too low then I had someplace I needed to go RIGHT NOW. They shot me a price that was about 20 times higher than what I had given for it. I told them I thought that would almost work but I needed a couple hundred more. Inch up inch up. Then I ask what monthly payments they could afford. You see what’s happening. I am letting them run the show and make their own decisions. The only thing I did not let them do was determine the interest rate. It’s a flat 1% and I will not budge from that. They were a little lower on the monthly payment than what I wanted but the house was a “don’t wanner” to me.

We did a handshake deal and they were the proud to be owners of a castle.

Some facts. Small town. Guy used leg braces and had a hard time walking but was very handy. Therefor I gave some concessions throughout our business transaction. Nothing was hard and fast. He missed the first three months of payments but was doing a lot of work on the house. I let the late payments slid. No late fees charged.

Agreement was that when it was paid off he would receive a quit claim deed or a specialty warranty deed. He passed away this past December but his Girlfriend still wants to buy the house. I will maintain the same agreement with her.

This little shinny “don’t wanner” goose is doing ok if you have time to wait for the payments. By the time it’s all done and said they will have paid me about 15K for a dwelling unit that I had first tried to sell back to the original owner for 6K. Purchase price was $450.00 and I didn’t do a quiet title.

I own 23 rentals (some for over 20 years) and have flipped 65 homes.

I would sell it. Sounds like very little return % wise and cash wise for being a landlord.

I strive for a minimum of 15% return on a rental - assuming 1 month vacant and reasonable repairs a month (likely $100) $100 seems high but occasionally you need a roof, furnance etc.

The consensus view appears to be "SELL". I was leaning that way any way. Not really wanting to mess with a rehab right now.

Mike SWMO, yes, this is that same little rough diamond we toured. No money bags here...simply ready to unload it and move on to other things. I goofed doing Quiet Title on these 3 parcels--they're much too cheap to make it worthwhile--but now we're down to less than a month (in a process that takes 8 months). Might as well see it thru to the (bitter) end. If I break even on this little pile of trash, I'll call it a relatively cheap learning experience.

Rent To Own....

Personally I would keep it. $450 a month times 30 years plus growing rents in that time vs one lump sum after a quick sale.

This will probably be an easy to rent place, most likely single occupant bachelor pad with bare bones flooring and fixtures.

I have an almost Xerox copy of this building. It's an old convrted 1930's chicken coop I bought in '09. 400 sq ft 1/1. Rents for $500 +/-.

Me? Clean it up and sell it. Your time and energy are more valuable then investing in a home that will still be hard to rent when repaired.

Take the money from this one plus the $25 it will really cost and fond a decent prop.

Something I have done to sell a crummy house - broom clean then spray EVERYTHING with Zinsser BIN. Make it a total whiteout. Looks much better than tje filth and odd colors!