Weekend Reading: How do you know if a deal is a steal?

Here's what I'm looking at now: A bank-owned property in Oakland priced at least 40% below its market value in 2005. And the question is: Can this really be the screaming bargain it appears to be on first glance, or am I the proverbial sucker at the table?

The house was built in '02-'03 and was initially priced about $100K more than it's selling for now. (You'll forgive me for not disclosing its precise location; this is business, after all.) In '05, the house next door-same square footage, same floor plan, built by the same builder-sold for another $100K above that.

I know what they were originally listed for (and when) from MLS data. I know what the house next door sold for in '05, and how much was owed to the bank on this one, from PropertyShark, ironically, Flipper's best friend...

That said, the location is iffy-one block over and you're solidly within a well-kept middle-class neighborhood where home values have been holding steady, but one block the other way it starts to gets kind of dicey. There's a small senior living apartment building across the street, and a good public elementary school at the end of the block. And there's one bit of obvious damage: At some point the upstairs toilet was leaking, and you can see the water damage on the living room ceiling. (Since it's bank-owned, I'd be buying "as-is.") But rental comps in the area suggest that, at 30% down, I can easily cover the mortgage, taxes, and insurance and probably would even eke out some positive cash flow.

So...deal or no deal? Discuss.

Read the Flipper's last adventure here.

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