Well I sent my first Letter of Intent.
It was very low and I knew it would not be accepted.
ARV = $360,000 - conservative estimate
Original Purchase Price = 369,000
They dropped to $325,000 (conversation I had with realtor about a week and half ago).
Situation - seller is out of the home, no mortgage (checked at public access records) house is left like a hell hole, with tons of “stuff” - junk, literally filling the house.
179,000 with 5k down (I would use a traditional mortgage loan - maybe interest only loan) - I put in the letter of intent, that seller could leave ALL unwanted crap and all current damages as is - that I would take care of them - thus relieving seller of having to clean up the home in anyway - they haven’t for years so I figured maybe this would seem at least somewhat appealing.
I got an email back from realtor stating quite coldly:
Seller does not want to counter.
So sent realtor an email saying basically - my offer stands and is negotiable. If seller wants to sell home, it might be good idea if you actually broker a deal (do what you’re eventually going to get paid to do!) and speak to seller. I informed him that I hope he could communicate with seller that this is not personal, that it is business.
Anyhoot, my second offer will be:
215k - with seller financing to include holding a note for 6 months.
We will rehab, then refi at 70% LTV- pay off seller and rent it
at 70% LTV - mortgage will be around 252,000
Monthly mortage - $1900
Rent for homes run about that much - so it would be break even situation or very little cash flow.
Second option is of course - refi for as much as possible and then just put it up on market to sell.
Oh by the way, my offers were based on
$30,000 in repairs (very generous estimate)
$7000 for holding expenses etc.
2nd deal: ARV 360K X .70 - repairs/holding costs = 252k