$799,999 Beach Condo No Mortgage!!!

[velteinvestor]

Hello fellow investors, I need a little bit of advice.  I've come across a vacant beach condo in VA that is just over 5 1/2 years old, in perfect condition with tons of ammenities.  The owners inherited money and used that to purchase the condo, they did receive a bridge loan and are straining to pay that and their new mortgage.  The home market is slowing down a bit here in the area and homes are moving much slowly now.  The owners realize that as well.  So guess I'm just wondering since this would be my first creative deal what is the best way to go about this with the least amount of risk?  L/O, sell the contract...
They're asking $799,999, their neighbors are selling for $40,000 more b/c they're using an agent, and they've had NO BITES, NO NOTHING.  I'm scheduled to meet with them on Friday and go over things.....HELP, I DON'T WANT TO BLOW THIS!!!! :o

[blueboxer]

Sorry, I dont have anything to contribute, but I would like to hear what others have to say.

[velteinvestor]

Thanks, man I was all excited like ok here's something....but hey maybe someone will eventually post and maybe we can all learn a thing or two!  

[kdhastedt]

What is the property really worth?

If the neighbors are selling for $840K with no bites, obviously it's not worth $839K!  If they want $800K, where's the deal. It's only 5% below the overpriced house that won't sell...

A $800K property in VA is a handfull...how will you pay for it when it doesn't sell for a year?

What are you wanting to make on this "deal"?  How many buyers are there for a $800K condo?

Personally, I don't think there's much here unless they're ready to offer a significant discount....

Keith

[velteinvestor]

Hi Keith,
Thanks for the reply, so if they'll take a significant discount could there be a deal in this?  I just located it today and I'm going to look up comps tonight.  I guess I need to know what they NEED and what they NEED to cover that bridge mortgage.  Maybe if they would take a large discount and accept payments to cover that bridge???  I"m just not sure how to handle it, or if it's even profitable in any way shape or form.  It is within walkin distance to the Ocean...

[StewedSquirrel]

Just because you found somenoe who "needs" to sell, doesn't mean that it is a good deal.

Look up the comps.  In fact, you should have looked up the comps first.  Very first thing, (FIRST) is to know the value.  Don't even talk to the people until you know the value.

Now, by letting them speak first, you have a strong position to make a decision.  Obviously, they paid $799k.  This may have been a horrible deal.  If it was, do you think they're prepared to take a $100k loss on it?   If not, you can't help them.

If they're dead-set on selling it at $800k, I advise they try to get a home equity loan to cover the monthly expences.

But...  you said there is no mortgage...  Why would they have a "bridge" loan?  That is generally a short term loan taken when someone needs to have two mortgages at the same time and couldn't normally qualify for both.  If this house is free and clear, why the need for a bridge?  Are their previous house payments the same as they were when they lived there?  Why would they suddenly be having trouble paying them after inheriting a sum?

Seems to me there might be something missing here...

Stew

[velteinvestor]

Hi Stew,

Ok so find comps....working on it!  As far as the bridge loan I'm not too sure on how or why they have it. It was purchased a little of 5 years ago, and they barely even used it...family issues.  She tried explaining it to me but I was just trying to stay on the same page at the moment ???  If they are prepared to take a huge loss such as 100,000 where do we go from there.  I offer them $699,000 as a lease option with a long term?  Rent to cover their bridge? I'm working on my first deal and if this is the one I don't want to mess it up.  I'm supposed to meet with them on Friday.  I think because the price is so large it's making me more nervous.  I've gotten past my fear of talking to buyers and sellers on the phone, but now it's on to new fears...how to negotiate a good deal!!   Ahhhhh tis life, guess it's back to the books for me... :
Thanks for your information!!!

[StewedSquirrel]

What are you planning on doing with it?  An 800k property is unlikely to cashflow as a rental in Virginia.  On a 6% fixed rate loan for $800k, you'll pay 4,796.40 per month plus taxes and insurance, probably pushing $6000 per month.   Other than renting it weekly as a vacation property, i can't see covering that.

In what context do you mention a lease option?  Usually it's used to help downtrodden home buyers rebuild credit or gain a little equity before they purchase.  Ask yourself if this type of person will be buying an 800k beach front property.

Sale of contract is something you can do if you get them to sign the contract for way below market/asking price.  If you can get them to sign a contract for $550k, then you have something valuable on your hands.  A contract for $799k is worthless (to sell) because they could just walk up to the neighbor and probably get a contract for $799k tomorrow.

I'm still confused how you plan to make money on this property.  The simple act of owning property does not translate into making money.   You have to have a plan and you DO have to get a good deal.  If you get a bad deal, you will lose money, no amount of creativity can fix that, in my opinion.

Eric