I am looking at a 1950’s, 2500 square foot home in nice neighborhood. Owner is willing to owner finance. Wants me to make an offer. She was asking $130k, I told her I couldnt pay that much. It just needs updating, I will remove wallpaper and paint, new appliances, counter tops and the pink ceramic tile bathroom has to go. Wood shingle roof is six years old. I would live in the home while doing repairs. I have estimated materials for rehab at just under $15,000. Comps in the area are selling for $160 to $180,000.
I am considering offering $115,000 if she will provide 100% financing. She said she will finance at 5 1/2% amortized at 30 years with balloon payment due on 60th month. I would make monthly payments while living there which would be less than I am currently paying in rent. I would expect to complete repairs within six months. I would list property at $169,000. I could put on the market in six months or wait the two years to avoid having to pay taxes on the gain.
I would appreciatte your comments on this possible deal. Thanks
What’s your local market like? Is it up,down or flat? What’s driving the market in your area? On the surface it looks like you can make 25-30k on the deal. An owner financing deal at 5.5% is attractive when you consider what hard mney costs. If you can sell it within the 5 yrs. that’s great, but if you can live in it for less than renting is nice also. With a rehab, you can easily find more problems as you get into it. This can quickly eat into your profit. If you can buy & rehab for 130k, it sounds decent to me. Especially when you don’t have the pressure to refi quickly. Just make sure you nail the rehab costs down. Good luck! :beer
Sounds like a winner if you are correct about your ARV and your rehab costs.
I would be jumping all over this one with the owner financing.
A seasoned rehabber (which I am not) would probably not take the deal. You’re looking at paying 77% of ARV if your estimates are right. Assume your estimates are off a bit and there will be more to spend.
Having said that, if you can get in and sell it, it’s not a bad payday for some education, imo.
The first thing I thought was “get it inspected.” :biggrin
I wouldn’t offer her more than $90,000.