Shappee,
Have you had a real conversation with this seller yet to determine what it is they need right now? I know you gave a list of what they want (35k in equity, half now, half later) but what is it that they will take?
Why do they need to sell? Financial problems? Divorce? Or “just thinking about selling”? You really need this information before you can formulate an offer that both worrks for them and gives you the best possible deal.
Let’s say your assessment of market value is correct at 165k, and the seller’s estimate of repairs at 10k is correct as well, I would normally pay no more than 110 to 115k for this property if I could take it sub2. This of course would leave no room to flip the contract so my exit would be either sell for cash or with seller financing. Obviously if I were going to flip, I would have to pay even less (my flip fee) for it.
Shappee, I just closed on a house this week where the seller called me wanting 85k. The house comps at 100k and needed about 5k in fix-up. There was a 45k NQA FHA on the house and the seller wanted their equity in cash. After some kitchen table discussion (literally) with the seller, I discovered she needed the cash from the house to settle a debt. She was divorced and didn’t even have the cash to make next month’s payment.
After our talk, she agreed to take 60k for the house. She got 15k in equity for her immediate financial need and she got debt relief. I got a house for 65 cents on the dollar after repairs. It is funny, when she first called, she was very firm on her asking price but upon meeting with her, she become more…errrr…flexible. deal
As for what exit to use on your house, I would say that depends on how successful your negotiation with the seller is, as well as where you are in your investing career. The better deal you get, the more options that will open up for you.
Make an appointment with the seller, talk with them and discover their real need to sell. I promise you, once you know their true motivation, you will know what to offer. Ask questions. Your offer will be found in their answers.
Good luck in your negotiations.