Has anyone ever found a buyer, then found a home that fits their parameters and then rehabbed and sold it to said buyer? Or basically ‘gone about it backwards’?
I have a potential buyer who has a large sum down and bad credit, and I am figuring this route would work good and then I owner finance the rest.
She has like 40% or $30,000 to put down.
Any pitfalls or potential problems to look for when doing a rehab this way?
My fear would be that the buyer would back out mid or end of project. If the rehab will make money sold to any other person, and it wouldn’t matter, I would go for it. I would just be nervous about designing the home too specific for one person, unless you already have everything about the remodel, and purchase in writing.
That’s very easy. If they are truly serious about the deal, have them give you the $30,000 in the form of a NON-REFUNDABLE deposit UP FRONT. That will tell you how serious they really are (or, more likely, are not).
Mike
Just do the rehab as you normally would. If they want something non-standard, they can pay for it.
I was figuring something like this as well. Like having them sign a purchase contract with a non refundable deposit before I start rehabbing…
I had this happen a few times. If someone came up and wanted to buy the property before it was finished, I would say, fine. Let’s sign a contract with a nonrefundable earnest money. You do that, you can choose color of paint and carpet.
I’ve had maybe 100 people ask, and five actually did it.
Yeah, that’s sounds pretty reasonable - thanks for the help guys.
Take the $30k as a closing cost - put the home in a trust with both of you as beneficiaries, and you are trustee… you can then owner finance for a year or two until she can refi out…
or something close to that…
this is similar to what one of the members here does…
or, as mentioned, just take it as a straight deposit. if she walks, you can sell it at a discount… i think this may have different tax consequences than the land trust method above…
All I can say is good luck with that strategy. As a real estate broker, I work with buyers all the time and they tell me exactly what they’re looking for and sometimes when I think I’ve found their house, for one reason or another they won’t like it and we end up buying something completely different. It just boils down to the fact that people don’t really know what they’re looking for which is why everyone else is suggesting that you lock them in for this very reason.
grooming the buyer isn’t a bad strategy if you specialize in slow credit buyers. i have a client specializing in this and he gets top dollar for his band-aid rehabs becuase the buyers are motivated, anxious and have fewer people willing to work with them.