This is the continuation from my last post…He gave me the numbers.
What hes owes: 435,000
the house is worth: 475,000
hes 2 months behind= $5000
Remind you im going to wholeasle this deal but i want to know is this worth going after… to me it seems a little to tight to squeeze any money out of this deal…
i was thinking about waiting until the person is in default and try to short sale this but would the bank work with me since the house dosent need any repairs?
thanks for thanks help…
I suggest that you leave this deal on the table. If you buy this property, and sell it retail for full value, you will just barely get your money back. The only way that I see to make any money out of this deal is to rent the property for 4 or 5 years and hope that appreciation is better than the repairs that will have to be done. This property might be a candidate for a short sale, but it depends on how hot the market is in the area that you are looking. If the market is booming, the bank will want as much as they can get. If the market is in a slump, you might be able to get a discount so they can unload it quickly, but I would not expect a whole lot there. There are too many deals that can be gotten that have at least 20 percent equity that you can pick up to buy this one and get stuck with a lemon.
Just curious as to how much the spread should be between whats owed (including arrears) and market value before you do a deal. Any rule of thumbs? Thanks
It varies depending on the deal and what I am going to do with the property. I don’t have a set in concrete percentage that I must have to make things work. With that being said, I want at least 20 percent equity before I put any money into the deal. I bought 1 property for 75K that was worth about 100K, put 15K into it, got it appraised for 120K, and sold if for 110K. I probably would have been better off just selling it to another investor, but I still made some money out of the deal even after carrying costs and unforseen expenses (about 10K and talk about a headache). I don’t do just pre-forclosures though. I always want to make money when I buy so that when I get ready to sell, I don’t have to worry that the market has dropped an I can’t get a profit out of it.
I hope that my answer was clear enough for you to make sense out of. I was kind of rambling. Sorry.