Well after many ways of marketing I’ve gotten leads coming in my hat goes off to Javipa for giving me the bump i need and i now have a Seller willing to deal.
Here is the details
Seller has property inherited from sick dying father
Needs money for medical bills
Out of town owner
Property is currently rented for $800 mo with long term tenants
Not the best but not the worst area of town comparable rents are $950 mo
Property ARV$ 87k
Seller wants $45k
Seller claims interior is renovated exterior needs new siding gutters possible roof
Property according to seller is free & clear
Seller does not want renters put out if home is purchased
Comps are almost non existent in the area ARV obtained via
I KNOW I KNOW not the best place to get comps however that’s all I can do for now
So long term tenants in place paying religiously ( sellers words )
Property still needs work estimated 15 k
Have appointment in 2 days to meet seller at property
My concern is that homes aren’t selling in the area much no activity in last 6 months
it is also maybe about 100 yards from train tracks
I’m curious how would I structure this deal
possible cashflow deal to buyers with existing tenants
You can give him what he wants, and still present a very good long term investment opportunity to your buyers. Check this out:
ARV $87,000
Max % of ARV 85%
Repairs $15,000
Closing Costs (%) 3%
Holding Costs $572
Wholesale Profit $10,000
Max Offer $47,182
Rental Rate of Return:
End-Buyer Cost Basis $73,950
Max Rent $950
Projected Monthly Expenses $152
Cap Rate (Rate of Return) 12.95%
Now, if you think you can get it cheaper, go ahead and negotiate. But, even if he stands firm, you can give him the $47k and still have a good chance at flipping it, given the little I know about this deal.
You present it like this to buyers:
You’re going to be getting a 13% return on your investment annually.
You’ll own the house free and clear in 6.5 years, making it at that point an ATM machine.
It’s a turn key investment, with a renter in place.
And, with the renter in place, you don’t have to make any repairs or upgrades now.
Check out the numbers with no repairs:
ARV $87,000
Max % of ARV 68%
Repairs
Closing Costs (%) 3%
Holding Costs $574
Wholesale Profit $10,000
Max Offer $47,385
Rental Rate of Return:
End-Buyer Cost Basis $59,160
Max Rent $950
Projected Monthly Expenses $152
Cap Rate (Rate of Return) 16.19%
How you present it is the key. You’re not selling houses. You’re selling investments. You’re selling the dream.
I would like yo know how you arrived at those numbers if you can explain the math formulas in detail for me I would be thrilled to have a tighter gasp on how to present these type of investment deals to my buyers thank you
Those numbers come from a handy dandy little program created specifically for me and my coaching program, by an investor named Daniil Kleyman. I only plug in ARV, % of ARV, repairs, profit and max rent. And it does the rest.
For info on CAP rate and cash-on-cash rate of return, all you need to do is google them. You’ll find the formulas and definitions all over the web. And will probably explain it a whole lot better than I…
Deciding what kind of deal it is - rental vs rehab - is key to understanding how to price it. It also tells you what kind of buyer you are looking for. Landlords will generally pay more, if you can show long-term gains. Rehabbers pay less, and need tons of instant equity.
Without knowing this, you may think that you need to get this house at $.40 on the dollar, which will price you right out of the deal, most likely.