hello everyone I would greatly appreciate your feedback. Ok here’s the details:
VERY MOTIVATED SELLER
BEAUTIFUL HOUSE INSIDE AND OUT
1500 SQ FT 400 SQ FT DECK
ASKING PRICE 136,900
HE OWES 70,000 APR 3.7% MORTGAGE PYMT 700 INCLUDING TAXES AND INSURANCE
NO REPAIRS NEEDED
HE’S OPEN TO OWNER FINANCING AND ANYTHING ELSE I CAN DO…BUT…
HE WANTS HIS EQUITY OUT WHICH IS ABOUT 50K. HE SAID THE HOUSE COULD RENT FOR 1250.
I JUST NEED HELP…THIS IS MY FIRST DEAL. THANKS
Hi Shalya,
I see a bit more information here on your deal.
I am assuming that you have done your homework and the property is worth at least $20K more in real equity than you are going to buy it for.
If there isn’t AT LEAST that much equity, then there isn’t a deal here. and he isn’t really that motivated, especially if he has to have his equity up front.
Everything I am going to say after this assumes that there is equity in this deal.
If that Mortgage rate is locked in for some time yet, you will want to take advantage of that if you can. For me that would mean taking it over “subject to” if you can swing it.
The exit I would try to use would be a Lease option, if you can get the seller to wait for his equity 1-2 years. He may be willing to do this if he understands that he can possibly get more. If you find out what he is going to use the money for, you can often times come up with a solution.
If he absolutely has to have his equity now now, then you may have an assignment of contract type deal, a double closing, or need to bring in an investor with the $50K to partner with you.
You will want to verify that rent number, if that is truly what it can rent for, then you should be able to sell it via a lease option for an even higher monthly payment, creating and even bigger monthly spread.
This brings up a key idea in RE investing, creating your buyers list first.
You can probably see how easy it would be to sell or assign this property if you had previously created a buyers list of a few hundred people.
I would immediately start advertising for buyers. Even if you haven’t locked up the deal and it falls apart. You want to start the list.
Depending on the flexibility of your seller, you will either want to tout the ease of purchase
Only if he is wiling to wait for the equity. as you will try to take it over subject to, via lease option, land contract etc, and then sell on a lease option
or tout
the large amount of equity in the deal
Only if he has to have the equity right now. In this case you need a cash buyer to do a compressed (double) closing, or a buyer/investor to assign the contract to, or a partner to put up the $50K
These ideas should start to draw people in so you can show the interested ones and start a list for the next property yo have.
Best of luck,
James
im gona be honest, im only 19 and planning on starting my frist Lease option deal this summer break, if it is like a purchase option deal i read that you are able to do a deal called Equity Split which is from the free ebook by Peter Conti. But this will prolly only work if hes NOT asking for his 50k up front. for more info on Equity Split , read his book offered free by this website
If that Mortgage rate is locked in for some time yet, you will want to take advantage of that if you can. For me that would mean taking it over “subject to” if you can swing it.
You shouldn’t waste your time on this if there isn’t free equity the day you buy. If he wants that much cash, I would want 5 times more free equity. Ask him if he will wait for the 50k when you cash out, you will secure him with a second mortgage on the property with no payments and no interest. In the meantime you will take over his payments on the first.
“Well, when will I get paid off?”
“I don’t know. But I’ll keep making your payments until you do.”
“How do I know I’ll get paid?”
“You’ll be secured with a second mortgage… my buyer can’t get bank financing without paying you off.”
If he wasn’t interested in that, forget about it. Crank up your buying machine.