After my "And the Winner is..." post yesterday, I got alot of questions asking why those properties were so cheap. I apologize for not addressing this in my earlier posts. The median home price in Atlanta is $197,000 so why are these properties so cheap???
- They are not in the best neighborhood. Alot of people, given the choice, would not live in the area. Due to the proximity to downtown Atlanta, I feel the neighborhoods will be revitalized within a few years.
- There was alot of mortgage fraud in this area. Atlanta was one of the top areas in the nation for mortgage fraud. Investors would inflate values of properties and get cash out and not pay the mortgage resulting in a foreclosure.
- These areas were hit hard by foreclosures. Alot of the homeowners took on exotic mortgages that they could not afford once the rates reset.
- The properties need work. As noted in the prior post, there were a couple of properties that needed ALOT of work before they could be habitable. A couple of them needed more work than I was willing to take on so I removed them from the list.
Based on the county tax records, here is the prior sales history.
- $ 17,000 on June 29, 1999
- $ 48,745 on July 14, 2003
- $130,000 on June 7, 2004 (I'm thinking this was when the property was renovated)
- $ 72,822 on March 1, 2005 (Wells Fargo Bank - assume this was a foreclosure)
- $ 54,000 on October 21, 2005 (assume this is the sale of the foreclosure)
- $134,950 on March 29, 2006
- $ 52,194 on June 5, 2007 (HSBC Mortgage Services - assume this is another foreclosure)
The asking price was reduced from $54,900 to $44,900 on 8/30/2007 and from $44,900 to $33,900 on 9/26/2007.
Wow - those are two considerable jumps in value. You have to wonder if that same house was involved in a fraudulent transaction 2 different times.
Anyway, good luck with your investment opportunity. Just keep doing your research!
Those are some really strange variations. Even with the foreclosure sale possibility, typically there is a minimum percentage of appraised value that will be used for purposes of an ordered foreclosure sale. In my area, two-thirds of appraised value. Any idea on the rents for these properties?
@Mike - I plan to put the property on the Section 8 program. They fair market rent for a 2 bedroom is $695. If I don't do section 8, I will probably ask about $600.
The property across the street is a 3 bedroom and they are asking $800 a month.