Critique this deal please

Ok, I have this new deal but nothing is closed yet.

ARV = 240 000
asking price = 200 000
morgage = 105 000
zero repairs

Seller wanted nothign to do with subject to. He had 100 000 in debts other than the mortgage (not attached to the property).

He accepted this other offer:

120 000 cash at closing (I have a private lender lined up at 7%)
He will take back a 2nd for 75 000$, no payments, no interest until we sell the house.

Exit strategy: just sell the house round robin auction style. If we sell it at 220 000 we still make 20 000.

I always hate the idea of having to put up so much money at closing but this still looks like a not so bad deal…

Any thoughts?

My question is, if the house needs no repairs, why the $240K ARV? Or do you mean that he is already discounting the price off of fair market value of $240? And how sure are you of that number?

And what is the other offer he accepted - was this from you, or another party?

Our first offer was doing it subject to, “relieving you of your mortgage debt”.

he wanted nothing to do with having another mortgage on his name even though he would have received more money at closing if he allowed us to do so… I couldn’t figure this one out. Obviously my approach to the whole relieving him of his debt by taking it over wasn’t well presented.

Lesson learned.

He wanted to get rid of the property as quickly as possible and would take the discount as such. He couldn’t afford to make payments on the house as well as his other credit card debts anymore.

I’ve looked at 4-5 other comparables and 240K is a fair number. Some properties have sold for 250-260.

still - his asking price is only about 16% off ARV. You should be offering him around $170 - although with his $100K in debts, this is not likely to be something he is interested in, but you could try.

This 15% is really tight with fees and such for closings. And supposed you cannot get $240 for the house? And you have to hold it for a while paying the mortgage?

Well its about 18-19% off ARV. And this is a conservative ARV. Worse case scenario it sells for 210 000. Best case scenario we get a buyer at 249K.

We calculated 5 grand for holding cost / marketing for 2 months. Including mortgage payments.

Whatever we sell above 200 000 will be our profit. Closing will be next week and we already have a few people that are interested in buying the home.

Closing costs in Canada aren’t as expensive as United States.

I dunno, I hate to put up so much money at closing, it’s private lender’s money so it’s still a nothing down deal (lol). I am a bit greedy I guess.

Worse case scenario we hold on to the property for 5 months, pay an extra 2000 in holding costs, and make about 6-10 000$ worse case.

Best case scenario we dump it 1 month later, for full price and make 40K.

If you’ve got multiple buyers lined up, why not do a simultaneous closing and not pay any holding costs at all.

i am so touched, first time read a Canadian deal here.
let me know how it goes ?

omg VTM 75k out of 195k, more than 40% omg omg… its real, its real…it actually exist…omg…omg i am so excited…omg