I have found what I think is a good deal and have a question.
Homeowners are willing to sell 100k below market value. Home is valued at 650k (great neighborhood with similar and even higher comps). In trying to get an assignable contract signed, the lawyer wanted a proof of funds letter. I am not certain how to proceed. I don’t have a buyer lined up yet. Any ideas, anyone?
That is going to be a very tough property to flip. As a first deal, I’d be real careful with it. The homeowners are discounting the price because they can’t sell it. What makes you think you can? If you can’t what is Plan B?
Don’t worry, deals like this one are done every day. It is called Flipping a property and if you do it the right way, it can be profitable. I have done it for over 20 years!
I would suggest in this market to have the owners come down even more on the price, $150k+, in order to give you enough room to lower the price, if you have to.
I would write a contract to tie up the property (make sure you have some contingencies in case you have to back out of the deal), then look for buyers: run an MLS search to see if there are cash investors in the area who purchase properties for cash, post Bandit signs in strategic corners advertising “Property $100k below market! Must sell fast!”, Craigslist, and also see if in your area you can list it in the MLS as “owner per contract.”
In the future, work on building a Buyers’ List before looking for properties, so that you have buyers lined up when you find the property.
And for the proof of funds, I have a great company I work with or look on your local Craigslist. You will find investors who will provide Proof of funds letters (Free, if you use them to provide funds to flip the property at closing.)
The seller’s lawyer has already said proof of funds required from the get-go. How is a new investor, with no experience and no cash, going to make a deal like this fly? On top of that, he’ll have to negotiate the sellers down at least $150K. What raw, inexperienced investor can do that?
As I said in my previous post, not a good deal at this time for this investor.
As I stated in my previous post, building a buyer’s list is fundamental in any flipping scenario. Since you are new, with no buyers lined up, why don’t you contact a wholesaler in your area and see what he/she thinks? They can let you know if that is a good deal based on the market value and they might have buyers for it. You can partner or assign the contract.
As far as proof of funds letters, even a new investor can get one, if he/she partners with a private lender and agrees to use their funds when flipping the property: it is called transactional funding.