I found a promising deal....

I met “Don” at a rummage sale who has his deceased brother’s house for sale. It’s been on the market a year listed with the realtor. Worth around $70k. Mortgage is $42k and in dead brother’s name. 2 or 3 bed, 1 bath, but has a 2nd floor with 2 bed, 1 bath, full kitchen and dining. 2nd floor is like a second home cuz the stairs are outside. It has a separate garage that needs new roof or needs to be torn down. He is flexible and will roll with the subject 2 lease option to me since it’s not in his name anyway. Question: will an unusual house like this sell quick? Each unit is too small, but if the teenagers lived upstairs… It’s not the 3 bed 2 bath I was looking for. Might be better…or worse. I don’t know how successful you guys have been with these types of houses.

Also, I called the realtor and played dumb: “So, uhh, since like, Don found the buyer himself, you only need 3% commission from him, not 6%, right, is that how it works?” She agreed. But I won’t even be “buying” the house, I’ll get the deed, make the payments and put a buyer in. So, since the house is listed at $50k, 3% is $1500. If Don or I can pay her $1500 and she accepts, which I think she would, wouldn’t she release him from the contract to pay her and Don would be free to do the lease option with me?

Strategy I’m thinking: Ask for him (and his brothers) to pay 90 (or 60) days on the loan. I’ll try to get them to pay all closing costs too, and ask for the deed for nothing. Then I’ll tell him I’ll help out with the realtor’s commission. He’ll likely want 2-4 grand, but, if I get him go agree on the 90 days, and the closing costs, and the realtor’s commission, then I can give him like $2000 and take the deed (I wouldn’t take the deed right then, I’d get it under contract for a $500 dept for 60 or 90 days until I get the buyer and sign right before that expires, hopefully 2 months after I’ve had the buyer in the house paying me!)

Am I on the right course here? For the remarket I’d sell it on a lease op for, I don’t know, $80k if I could get it, with as large of down payment as I can get. Since it’s my first deal I wouldn’t feel comfortable with less than $3k. For a lease option I’m kind of confused if I make up the final price at first or only after they exercise the option. :help

What is rent like in your area? I’m guessing it’s fairly high compared to prices with prices as low as you mentioned. This kind of “non-conforming” duplex is very common in my area. I wouldn’t sell it on a L/O, I would rent each unit out. You should get a very nice cash flow that way and you can refi into a 30 year fixed down the road and keep this place in your long-term portfolio.

tj, I have an up and coming similar scenario so I’m curious. Has this home been through Probate or maybe its not an issue? herbster

I don’t know! Hahaha. I’m guessing around $5-600 or so. I’ll walk the neighborhood and ask a few people. Plus I was chatting up this (possibly) cute realtor my age and I’ll probably go meet her this week. She said she’s open to what I’m doing and I told her I’ll work with her and make sure she gets paid her commissions. So, I can get a lot of info out of her about rent rates and such.

I’m ignorant of many aspects I’ve only been actively “investing” since Saturday. I kind of know which direction to go, though, because I studied hard for year…and just got back into the country last month. I think you’re right though, if I were renting, or doing a lease option/owner finance with a high % on their payment to me, the $20-30k homes in my area would be the best ratio-wise. And, I might do some, but, for the decent neighborhoods they’re going to be at least $50k, and I’d like to stick to the most basic stuff since I’m just starting out. And, I guess you’re right about keeping it in my portfolio and rented each out…but NAH! I’m lazy and I didn’t study landlording, I studied lease optioning. I want to stick with what I know a bit about to get at least one deal under my belt. If I run into troubles on my first deal I might lose confidence and go do something crazy like get a job or something. Nooo! That’d be 15 months of intense study down the drain!

I don’t know. I don’t really even know what probate means. I have a 2 hour audio on it on the Ipod that I should be listening to some time within the next few weeks. I’ll just crash and burn my way through for now! :slight_smile: The guy is making payments, though. I don’t know why they just didn’t let it go through foreclosure since they haven’t been able to sell it for a year.

You know, I thought a little about this. As Doug mentioned above, I could rent it out, that would be a little more money. I even thought about doing something crazy and lease optioning the house to someone, and renting the top part myself until the tenant buyer cashes me out. That’d be eeeevil! And, like I said, I’m just starting, so, I’ll stick to the norm. I think I’ll market is as having a rental unit above, and saying something like, “Includes rental unit. Have renters pay most of your monthly bill!” I don’t know, just a thought. That way I could possibly jack the price up a bit. Got any other ideas?

tj, I’m not an Attorney but I’ll take a stab at it. When a person dies then their assets will go through Probate court unless they had a Trust set up. So the monies from the sale of the home would first go to paying on old depts. So maybe its not this persons place to sell the property yet. I was hoping that someone else would chime in on this because I’m going to face this issue myself soon. Maybe I should just seek out a Probate Attorney. Herbster

Ahh, I see. I should listen to the 2 hour audio I have about probates. I just don’t have because I want to contact the seller today. Maybe I can wait until tmw because I can’t get the lawyer to my forms checked until at least tmw anyway. I wonder what would happen if they just deeded me the property and he still had debt? Maybe the decease doesn’t owe anything, since it’s been on the market for over a year?