Bread and Butter Neighborhoods....and the CONTEST
The Bread and Butter Neighborhoods
In my experience, 'bread and butter' neighborhoods where we do most of our deals, have a lot of these traits:
- Houses in perfect shape will sell for about $75,000 - $150,000
- Foreclosures and other run-down property will go on the market, and usually sit for a while, at $40-$50,000.
- Occasionally properties will appear on the market, or be seen in the "sold" area, for as low as $15,000 - $20,000 but probably not more than 1 or 2 per year.
- When you list your property, typically the cheapest property for sale in the whole area will be about $35,000-$45,000
- You'll want to list for $20-$25k and you will probably get an offer within 2-3 days if not sooner.
- This easily leaves $10k for profit in most cases - sometimes several offers will come in and you work the price higher.
Let's look at a deal that a student did in my area a couple years ago - this is a 'bread and butter' neighborhood.
South Hammond, IN (46324)
So first we look at the sold properties (yellow) around the subject property. This area is on the edge of this part of town, and "not in a good way". The area above this screenshot is one where we'd be careful before buying anything (though not nearly as bad as Detroit or Gary!).
But I'm seeing all the signs of this being a place I'd like to do some deals:
- "For Sale" Sale Houses (red) are available for $75k-$85k, and there is a retail sale the next block over for $99k.
- I'm seeing several properties that have sold a little lower than I'd like to see at $19k, 21k, and 24k. But then they go on up in price from there.
- Most importantly, I'm not seeing ANY "for sale" houses in the $25k range where I'd like to try to price this one. So it will get attention and sell quick - and I know based on the sold properties that this property can really retail at $70-90k.
In this particular case, there were about $13k of taxes, closing costs, and purchase price to pay to the owner when the property sold, so even if it could only fetch $18,000 (a really worst-case scenario given the prices I'm seeing), a solid $5k profit could still be had.
And in fact, there was a minor bidding war for the house, and it sold for $32,500 and made the student almost $20,000.
A Couple Other Quick Checks
Instead of looking at the map, take a look at the listings on the side of the screen. There are several sales that don't report a price or report $1 - these are usually HUD homes or other properties that haven't sold on the open market. There are a couple properties that sold for $1500 - $4000. But upon checking the GIS map I see they were teardowns sold for land value only (or already demolished but showing as a house).
Then there are 9 houses that sold from $18k-$30k. If this house got at least as much as the lowest-priced sale of the year, we'd make money.
So I know my property can potentially fetch at least $18-$30k because other sales have sshown it has been done, and there are not legitimate sales below this amount (or very few).
But what I like the most, by far, is that nothing is available right now for less than $39,900 and this is a foreclosure. This means if I price the house at $29,900 it will get a LOT of attention. And it did!
Three people will win a new Kindle Fire 6 HD today - will it be you?
- One entry per person - so choose your zip code carefully!
- First 3 people to post a "bread and butter zip code" will win a Kindle Fire (I am the sole judge of whether a zip code qualifies)
- I will try to respond to as many entries as possible, even if you're not one of the first 3 to correctly post
- Your entry will not appear to others for 24 hours, only to you - then I will unlock all of the entries.
Good luck, and post with the email address where you received today's email. Winners will be announced in a day or so!
Thanks for your submissions everyone - contest is now closed. Congratulations to the 4 winners (we added one prize due to confusion on one of the submissions)-