Property ARV $205k
HO owes $160K to single lender and is currently deficient by about $6K
about $15 to $20K in repairs
Should I put this under contract and wholesale?
I don’t have enough cash or time to rehab this one.
What is the best way to proceed???
Bajamas
I’m thinking you might need to look for another deal.
According to your numbers, you’ll have about $180K-plus tied up in a house that might be worth $205K. When you add in all of the other costs and the possibility that your $205K might be wrong (let alone what happens if you pay a 3% commission to a buyer’s agent), there might not be any margin in this deal at all. And if there are a few bucks, it’s not worth the risk…
Having said that, if you know of someone who will take the contract off your hands for a small profit, run with it. I would be surprised that an investor would buy it, though.
Good luck!
Bajamas -
i would say definitely not unless you have someone who’ll agree to buy it ahead of time.
that’s not an ideal situation, at all. where are you located.
What is you exit strategy? Do you want to rent it, do you want to rehab it, what do YOU want to do?
Just by looking the numbers, this deal won’t work no matter what.
I agree that house will not work in anyway find another deal that is at least 70% under actual value minus repair costs…
Example.
After repair value 100k
Needs 10k in repairs.
Your offer maximum should be
70% (70k) minus repair (10k)= $60,000 maximum offer for a fix and flip. If you are going to fix and rent then you want to make sure on this property you have a gross rent coming in of $1400 per month minimum to justify a 70k total investment. 1400/.02=70000 DOnt forget closing costs. Most investors would not touch that property as a wholesale flip unless they like to lose money…
I agree for the most part, but I think your numbers are a little off. There’s not much chance of getting $1400 rent for a 100K house anywhere close to me. More like about $900-1050. My 132K appraised house will rent at $1200 max, with alarm system and totally renovated. .01% is what I would bank on, and anything above that is a plus.
Just my .02 cents, I’m a newb.
You’re quite right that not all markets are the same. I see all these posts about people who are getting 2% of the property’s value each month in rent, and it just amazes me. In my market, it’s a really good deal to find a place that generates monthly rent of 1% of its market value. I just sold a duplex for $170K that generates monthly rent of $1400, and it was sold in less than two weeks.
This property is a preforeclosure! Can I SS with bank to create the equity for profit???
The entire deal has changed anyway. My wife and I went to look at the property today and found it was totally trashed! The owners must have felt pretty bitter before they moved out. Does this create a better situation? The repair cost just got much higher. I am even thinking maybe 30k to 35K as a first guess but don’t I now have much more room for negotiating a SS with the bank? The repairs are ALL cosmetic. I could even move in and make the necessary repairs myself! If I can sell my home, I will have more than enough to cover the rehab costs. How can I make this deal work? Especially since the bank hasn’t started any foreclosure proceedings yet. Do I have a dream deal in the making now or a nightmare best to stay clear of?!?!?
Here is what I am thinking:
ARV - $205k (Comps are between $205k and $215k)
HO owes $160K + $6k deficiency
repairs now looks like $30k to $35k but maybe much lower if I move in and do the work myself
$10K for holdings and RE commission on the sale
Offered a cash deal to the bank @ $120k or a bit lower for neg room.
Does this work? I am looking at a profit of $45 if my numbers look good (before Cap gains tax). I tried to keep everything on the high end.
Now, IF all the numbers look good, how do I make this happen since the NOD hasn’t even been filed yet?!?!?
Bajamas
the bank will not accept that. however it never hurts to put an offer in - however - make it lower than 120k. to me, with 35k in repairs and 10k holding with 210k ARV - and add to it that you’re new to all this - offer 110k cash.
the bank will not accept, they’ll just foreclose on it - do you have information about the bank or the mortgage - is it a FHA loan?
dwj - nice blog site!