Hey guys,
Long time forum troller but I have not much to contribute. Because of this forum I have successfully already have a great income from a duplex for over two years now. A deal has pretty much fell on my lap and looking to make a little money from it.
The current owner is 6 months behind in mortgage and bank will NOT negotiate a deal with them to stay.
They owe:
1st mortgage: 31,000
2nd mortgage: 7,000
Comparable homes in area that have closed in past 3 months have gone from 62,000 up to 99,000. I took the conservative route on these comps. I am a local realtor and have a few investor buddies that would be interested. It is not listed on mls or with any broker. I have heard people in the past make a contract to purchase and than selling the contract to an investor for a “finder fee”.
- What is a fair finder fee in your opinion?
- When I assign the contract over do I get paid from the HUD or upfront?
- Do you see any possible problems with doing this type of transaction?
- Any general advice you could give me to keep an eye out for?
thanks again for any answers or constructive criticism.
Donny
Donny, not enough info. here. They owe 38K plus the arrears = how much. Does it need any rehab and how much will that cost. The easiest but least profitable would be to assign your contract for a fee, but if you rehab it and its worth more then sell it an investor or owner occupant. Herbster
Thanks Herbster. You bring up very valid points. I speak to the homeowners in the morning and will assess the home. I will also see how much they are arrear. I would love to be able to rehab and flip it but cash flow is at stall. I have a sister and her family that I am helping out financially. I will update soon. thanks again.
Spoke to homeowners and looks like they are behind in mortgage payments, interest, penalties, and lawyer fees in the amount of $4,000. They also have a lien on home from city for a home improvement loan from 9 years back. If they were to sell, default, or etc. on the house they would have to pay around $4,200 back to the city.
1st mortgage: 31,000
2nd mortgage: 7,000
Arrears: 4,000
City Liens: 4,200
What would be a fair finder’s fee?
Do I get paid outside of closing, at closing, or upfront?
Donny, depends on what you want to do
Two ways to do it are to
Sign a purchase contract, then assign the contract over to an investor. - for this the fee is generally going to be 1k-5k-??? - whatever you can get. If the deal is good enough and you assign to a retail buyer, you potentially could get $10k or more.
Sign an option with the seller to buy the house within 6 months (or however long you can get) and then assign the option to the seller. Both work, although the signed contract is a little stronger than the option.
The biggest question still is are any remodeling needed, and what could it sell for as far as FMV and ARV? If the ARV is $66k there probably is not enough to make this a good wholesale deal, since you already are looking at $46,200 before any fee to you, transaction costs, carrying costs (taxes, utilities and mortgage interest before you can resell) and any rehab needing done.
If NOTHING needs to be done to make it tenant ready, you might be able to wholesale to a landlord for maybe a $2k-$5k fee.
You can get paid inside the transaction or outside, but in most cases the buyer you wholesale to pays you a nonrefundable deposit ($1000 or whatever you can get) and you get paid the rest from the closing and are listed on the HUD.
Thanks Salverston for your knowlege and assistance. Once again this forum has helped me put together a deal.