Can't get Buyer even with Positive Cash Flow, HELP!

Bird Dogs, Wholesaling
1

Hi guys, here’s a question. I have 3 properties selling as a package, a total of 17 units that have positive cash flow, but I can’t get any interest from buyers because the forclosure market is killing values and the homes are in Not-So-Good areas of the same city. These homes are about 50% of ARV, and the cash flow is positive right now with 5 of the units vacant, but no one will touch them. Can anyone tell me how I can market these properties to get a buyer? I’ve tried signs, newspaper, lists, calling brokers that have sold homes in these areas, called For Rent signs in the area. Any help would be great. Thanks. DAVE

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I’m just curious, did you have a list of buyers before you got these properties under contract or did you do it the other way around? Did you try your local REI Club? Also call other wholesalers, they may have a some buyers that aren’t on your list. Also try posting the deal in the rental section and houses for sale sections on craigslist. The name of the game these days is cashflow. If these are strong or potentially strong cash flowing deals, then you should get a bite from what I mentioned.

3

Are you posting “owner financing” on your ads. You have to be a flexible seller in today’s market. You’ll get 3 times as many calls then your conventional advertising. I understand if you don’t want to go this route but just think about it for a minute. If you had to hold a 5% 2nd mortgage to sell these houses wouldn’t that still be better then holding them? If someone came by with 20% down you wouldn’t want to do a wrap around mortgage and make cash flow every month without touching the property? If you want to really sell you’ll become flexible and take one of these options. Good luck.

4

GoodShowDave

Good to meet you

Give me more information on the deals… “Sell” them to me…

Michael

5

Here we go Mike,
1st property
6 units - 2 rented / 4 vacant No Repairs needed. Rent potential $3600 per month
2nd property
6 units - 6 rented Rents bring $4200 per month
3rd property
4 Residential units - 3 rented / 1 vacant +Store Front (Rented $1000) + Parking Lot (Rented $500) Rents bring $3600 total with Apt’s, Store Front & Parking Lot
All buildings are certified through the city and are in rentable condition.

Owner needs thick skin in these areas / Good Rental History
Package Deal - $525,000 Cash Only / Quick Close

What do you think? This is crazy positive cash flow. The problem I’m having is with the area. Thanks for the advise. DAVE

6

Hi Dave,

Sorry that things’ haven’t worked for you.
What about the other landlords in the area?
Surely there are some folks that know and are comfortable with the
area these properties are located in.

Also, I would look at the feedback you’re getting from buyers.

What are they saying? Can it be rectified?
Otherwise, you may need to give them a better deal- Either Price or Terms.
Because everything is relative to your buyer’s comfort level.

All the Best

Dennis

7

If I can be bold…

Dave needs to learn never to advertise a property the way he did…

“Owner needs thick skin in these areas / Good Rental History
Package Deal - $525,000 Cash Only / Quick Close”

I read stay away…

I would be looking at people who are already in the area… Typically a bad area isn’t bad for people who live there. The other issue is the Cash Only…

If Dave must have the cash he needs to find a HMEL who is willing to position cash for the buyer… He did indicate that the ARV was 50%. Or better he should place the financing on the property and then either wrap or Contract for deed. If the loan is HM then that loan is most likely a Non-Qual assumable note.

The other issue is he may need to sacrifice the CASH position for part cash part equity or part cash part subordinated note.

The fact that they are classified as a commercial property from a lenders standpoint. is a large negative … Are they conforming use at 6 units? Can they become 4 units which will make financing easier and finding a buyer easier.

Also Dave might want to indicate performance and create an APOD http://www.michaelquarles.com/Apod.pdf

Make everyone want these units…

8

Dave,

I agree with Mike on this…sounding too anxious or desperate will not get you a sale. There are a couple things I would consider if I owned the property and needed money.

  1. Make the rents more competitive and reduce your vacancy rate so the cash flow is raised and improves the value of the property.

  2. If you have good credit, you can borrow the money you need from a line of credit at the bank and hypothicate the income from this property to repay the loan. When all is said and done, you still own the property and the income.

  3. Depending on the local ordinances, you could turn this into a rooming house facility and substantially raise the cash flow, then sell it as a business which will add to your potential buyer pool.

  4. I think if you give up the idea of selling for ‘cash with quick closing,’ you could find a viable buyer at a higher price if you gave terms…that would be more agreeable in the current economy.

You need to make it attractive to your buyer…not just to you, Mr. I Need Cash Quickly! Don’t foget the economy in the past 3 1/2 years has taken many cash buyers and rendered them cashless.

Let us know what city and state these are located…perhaps I would be a buyer or one of the other investor/readers on this forum.

Rob
R.E. Investor/Mentor

9

Hey guys, again, I love all the feedback. I’m trying to wholesale this deal for the owner who is trying to unload the properties because he’s going to be facing bankruptcy at the end of Feb. if he doesn’t get rid of them and the properties are going to go down with him. He’s stuck in a High Interest Rate / No Chance to REFI and he wants to get out before the banks start to put leins on the properties. He Refi’d the properties on low interest credit cards and now they are adjusting to rates that aren’t affordable. There is no chance here for owner financing or Refi-Wrap. I appreciate all the info that you’ve shared and I don’t know if this is even allowable the way the owner is trying to get out. Thanks again for all the help. DAVE

10

Dave, any luck finding a buyer for these properties? Has the seller gone into BK yet?

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I also agree with Mike. Ad tells me…need special forces experience, please help me unload these properties. makes one wonder what other issues will be encountered…next!.