Spent the weekend looking at a bunch of properties for the first time in a while. I was pleasantly surprised that there were some seemingly good deals out there, but at the same time, when I talked to the listing agents to get their status, it appears many of them either already had offers on them or were up for auction.
We ended up submitting three offers Sunday night. The first one turned out to already be under contract, the second one is scheduled for auction next week and they were only accepting “pre-auction” bids, and the third one we’re still waiting to hear back on.
Normally, we would have made many more offers, but we noticed that many of the properties we were interested in were scheduled for auction, and I have a feeling that we won’t be able to acquire these unless they don’t sell at auction. So, hopefully in a week or two, we’ll be able to submit offers on those as well. In addition, a relatively large percentage of the low-priced REOs listed in our area are houses that were flooded last September during the “500 year flood”.
While I have no issue with buying flood houses that have been stripped down to the studs, they do present several concerns:
- Most of these houses are not currently in a flood plain, but could get reclassified at any time, which would seriously hurt the short-term resale value;
- Most of these houses are in subdivisions that were completely wiped out, so it’s unclear that we’d be able to find any retail comps to support an appraisal;
- Along with #2 above, because most of the houses in the subdivision have been flooded, most are empty (owners didn’t have flood insurance and therefore would have to pay for repairs out-of-pocket). This means that the neighborhoods will likely go downhill and more of the surrounding houses will end up in foreclosure over the next 12 months
I had lunch with a fellow investor today, and she made the suggestion that we should buy up large parts of these subdivisions, turn the houses into rentals, and hold them for a few years. She made some good arguments for doing this, and we’re planning to discuss some partnership opportunities around this idea.
So, things are moving along, albeit slowly at this point…hopefully I’ll have more exciting news about finding some properties soon…