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Author Topic: Is this a good deal?? PLEASE HELP  (Read 3301 times)

Offline fsid

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Is this a good deal?? PLEASE HELP
« on: January 01, 2005, 08:36:47 pm »
Hey guys, I've been looking at this property located in around East Orange NJ, but Iím not sure that this a good house to flip. The owner just got divorced and canít afford to keep the house. She needs to move ASAP. However, her current balance is 125,000 and she is 3 months behind as of December. Her current mortgage payments are 1227.93/month. The house is a colonial with 4bd/2.5 baths and is approximately 24000 square feet and has a ARV of $170,000. The only repairs needed are concrete steps in the front of the house and two ceiling that have tiles hanging. Now, I donít think this house is a good candidate to flip because the LTV is around 73%. What do you guys think I should do with this property or should I just move on to the next house. Please help me out anyway you can because your input is highly needed. Happy holidays.



Offline tedjr

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Re:Is this a good deal?? PLEASE HELP
« Reply #1 on: January 02, 2005, 05:40:54 am »
Howdy FSID:

If you are sure of the resell value it may be a good deal if you buy it sub2 the mortgage and fix it and resell. You also have a few options to resell using this method to buy the house.

Here is how I see the numbers:

Loan balance                 $125,000
Cash to cure default          $3,700
Cash to seller                    $2,000
Fix up costs                       $3,000
Carrying costs 120 days    $5,000
Misc                                    $2500
Total hard costs             $141,200

Now that as you see is a lot of costs well above 70% but if you have the $16,200 cash needed you would easly double that with the sale at $170,000.

These are only rough numbers and I did not figure taxes. The sales commission if any was not added to the cost as it will be paid when you sell.

You could also sell on a wrap or lease purchase  but may not get all your cash back. If you had to use hard money lenders to do the deal it will not work as their costs would be too high. The points would be about  $7500 and the interest carry would be about $1500 higher plus thet would still not loan you 100% of the deal leaving you to put close to $10,000 into the deal out of pocket.

If you heve or can get the $16,000 roughly it could be a good deal. If not you should look for another deal.
Ted P. Stokely Jr

San Antonio, Texas

Offline WilsonTaylor

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Re:Is this a good deal?? PLEASE HELP
« Reply #2 on: January 02, 2005, 08:04:28 am »
Ted Jr has some good ideas but there are a couple that he didn't mention.  I would recommend that you find out from a realtor what the average days on market are for your area and how much the average discount off of asking price the selling price has been for the last 3 months.  If you have to reduce the sales price of the house by 10 percent to sell it within the 3 months that you have allowed then you will be making a relatively slim margin for the sale (roughly 5 percent after selling costs).  Everything in this business is a risk, but the more you learn, the more you can minimize them.

Wilson

Offline AWHolden

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Re:Is this a good deal?? PLEASE HELP
« Reply #3 on: January 05, 2005, 02:55:10 pm »
Both replies are excellent. If I might add, I have had success in the past with a similar deal, contacting the lender (with permission from the seller) and having a heart to heart. If the bank is going to get this thing back, which they don't want, you can tell them you will save them by taking it over, but they are going to waive any payments in arrears and any prepayment penalties. You figure they are going to lose the back payments plus 6-7% realtor fees by taking it back in forclosure. You could easily save yourself $5,000 by making this call. Good Luck!

Offline rebirddogz

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Re:Is this a good deal?? PLEASE HELP
« Reply #4 on: January 12, 2005, 11:39:04 am »
Greetings fsid,

You've received good feedback so far.  I am a full time investor in NJ and can tell you that in E Orange you must be careful of where exactly it is located.  Neighborhoods where the houses move relatively quickly are 1 block away from houses that sit stagnant on the market. (ask me how i know!)  :)

Good luck
bulldog
« Last Edit: January 12, 2005, 11:46:18 am by TRandle »

Offline joehagan222

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Re:Is this a good deal?? PLEASE HELP
« Reply #5 on: January 14, 2005, 09:53:07 am »
 (WOW);

You halve so many great answers,I hesitate to reply with my 2 cents! There is a great addage. "If you have to ask,you can`t afford it." I think you were ask (How deep are your pockets)? Good question! Walk before you run. Start small deals,then advance to bigger and beter things!

If you are new in this business,get a mentor. Its better to split a few deals until you learn the business! Allways allways allways! Do your contracts (WITH PARTNERS APPROVAL) you may need an out on some of your mistakes!

                                   Good Luck;   Joehagan222
Just for you (BABY)!

 




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