I have a possible deal in my pipeline. The numbers are as follows: 3 bed 1 bath worth 140,000 and owner asking 119,000. I am pretty sure I can get it for around 100,000. I do not want to hold on to this property. I would like to get it on an option or something and try to sell for a profit. I would appreciate any and all ideas/comments. Thanks
Does the property require any rehab? how much is owed on the current note (if any). buying at 65% of value will have you purchasing this property for 91k (assuming the stated 140 FMV is accurate). How long has the property been on the market at the listed price?
no rehab needed the owner just put in hardwood floors among other upgrades. It could probablly use some paint but thats not a big deal. The owner only owes 15k on the property. Owner has been trying to sell for about 2 years because they own another residence. Price started out at 165 but due to the market the value dropped and the other price drops come from motivation to sell.
This deal sounds similar to two deals I did from one seller years ago except the homes were free and clear (not much different than your seller owing $15k). I negotiated a purchase price on each house and the seller accepted 50% down and held a reasonable interest 2nd mortgage for the balance behind a 65% new first mortgage. This enabled me to buy with nothing down, pay the closing costs, and walk away with some cash to ‘buy groceries.’ The loans were easy to obtain as they were only 65% LTV.
After the closing, I wrapped the first and ‘seller financed’ second with a new contract to an owner occupant in each of the homes, received a down payment for each home, then managed the cash flow for 2 years. After that, the buyers were able to secure new financing and pay off the entire underlying notes and the deals were done.
This might be a viable offer to your seller as he barely owes anything, he’s been trying to sell for a long time with no end insight, and the timing could be right for him to get half down and the other half in a 2nd note…which is better than the position he is currently in with all of his equity tied up.
Good to meet you
Question for you… Do you have the deal under contract?
Mike no the deal is not under contract because I am looking for advise on maybe what to offer and what to do with it. Like I said any ideas appreciated.
I guess my question was more rhetorical. If you can get a home worth 140k for 100k you should even if youre not certain how to do the deal.
What you cant do is do a deal without a contract… And if you let the seller wait they might call someone who will ask for a signature…
I understand, I am trying to set a meeting with the seller at which time I will try to get her to sign a contract. Not so sure what I am going to do with it after that because the number do not work to wholesale it but I think if I market the hell out of it and hold an open house I should be able to sell it becuase it is a good deal. Thoughts/comments?
kpetric, Just like Michael said, get it under contract. I prefer an Option myself. Once done there are many things you can do with this. You can assign a Lease Option or Land Contract(cfd) if the seller will agree or assign a new mortgage purchase or even wholesale it. If you wholesale you’ll get more profit from an O/O than an investor. My 2 cents anyway. Don’t forget some due diligence. Herbster