Have you ever seen an advertisement that read “Handyman Special”? I sure have. But often it is not a deal. In fact, most people, especially if they have a realtor involved in the transaction, will price a home for market less repair costs.
And even then, the “repair costs” that they estimate will likely not be the true costs, and/or they will add money to the price to be able to negotiate down.
So here’s the big problem when you see this type of advertising. All the wannabe and green investors come running. And they are likely to bid more than the house should go for, because they lack the required experience necessary to facilitate a profitable investment transaction.
My advice – either be the first one to the property and negotiate a deal that works, or be the last one to look at it. A handyman special that has sat on the market for months could likely be a deal. The key, as always, is knowing the seller’s level of motivation.
A seller who just lists the property and has 2 or more offers come in is not very likely to negotiate much, because they don’t have to. But let the property sit for awhile, and the seller tends to soften up. Be the seller’s last hope for a sale, and now you really have some leverage!
Be careful in the real estate investing game, the most important part by far is getting the property at a significant discount, or you won’t make any money.