I’d like to see what everyone thinks.
Please give me your input, harsh, complimentary or otherwise.
I may have found my first property. It’s a 3BR, 2BA split level. I found it doing a driveby. It’s overgrown and appears to have not been lived in in over a year. From looking through the windows, there’s still a little furniture in there, kitchen was being redone, some drywall in other parts are taken down. Shed is full of trash. You get the idea.
Tax assessment on the property is $326. Appears to be in the name of the original owner from 1968 who bought for $30k. Current mailing address is two hours away.
(Here’s where I want advice!!)
I’m planning to write a letter to the listed owner and mailing address on the tax records. I’m going to ask if they are the current owner of the house, let them know I may be interested in purchasing the house, and ask if I may get a look inside. If I can get inside, I’d bring a contractor friend with me to estimate repairs. Then have a RE Agent help devise comps and make an offer after I figure out financing. I’m going to work on the financing once I hear from the owner… hopefully hear from the owner. :cool
The realtor is a friend, and while I woudn’t ask him to do it for nothing, I don’t plan on using him as a buying agent, but more a resource for information. I will plan on using an attorney for the actual transaction to make sure I follow through and do everything correctly since this will be my first time.
I would first get a number in mind. What you will probably find is that this guy had never though about selling and has no idea what he should ask. So you need to know how much you would love to buy it for, how much is reasonable and the most you will possibly pay for it. The rare only 3 numbers that are pertinent. All else is pageantry to get the deal done. They are (A) how much you can get the house for. (B) How much the repairs, carrying and selling costs will be. And (C) how much you can sell it for. A+B must equal a whole lot less than C. If these numbers don’t work don’t even look back as you walk away from the deal. If you do you will turn into more than a pillar of salt. You will be a broke pillar of salt. A bad first deal will cause you to never do another deal again. Look for the home run.
I certainly plan to have my numbers in mind before I negotiate with the seller. I want to try and make contact before I make any kind of offer. I already have some numbers in mind, but I don’t know what the extent of the repairs will be until I get a look inside. And until I make contact with the owner, I don’t know how motivated they might be.
And I am completely prepared to just walk away. Completely business. If the numbers don’t make me feel comfortable, I’ll just keep looking for that first deal.
I find the only number I need to have in mind when I approach a situation like this is the probable conservative after repair value, my exit price. Just assume that the property has been put in saleable condition and do the comps.
I gather the info, explain I’m an investor and after get the data I need, and run the numbers,and check a few things out I’ll know a little better what I can offer you, and if the numbers don’t work for me maybe it would be better for you to get the property into market condition and list with a Realtor.
Before I leave I want the best price they are willing to sell at now, if it’s too high based on the ARV I have in mind I can tell them then it’s a no go because I don’t see where I can make a profit at that price, it was great to meet you,
Keep my card and if you hear of anyone with a property that I might be interested in give me a call, I pay $____ for any lead that results in me buying that property, I also pay that much for any buyer lead that results in the sale of a property I have fixed up.