My name is Christian B. O’laarte, I have a B.S. Degree in Business - 2005 and I have been reading/studying about REI for some time. I found a potential terrific REI deal. Here is the info so far:
I found this potential fixer in Southern California. This is a rare fixer because the property is empty and is located in one of the best places to live in the country. There’s always a big demand for housing in the area. Here is the property info:
- 1,250 SqFt
- Built in 1963
- Estimated current value is $300,000. However, the property is in bad
shape, a total fixer, so I’m sure the price can be negotiated to a real
- Similar properties in the neighborhood sell for $400,000 and up!
This could be a terrific opportunity and I’m sure neighbors would love to see this property getting a face-lift! The estimated value is current before any rehab or repairs, which is around $300,000. However, the property is empty and it seems like it needs a lot of work. I estimate that a RE Investor can acquire this property for around $200,000 to 250,000 after negotiations. Similar homes occupied in good condition have estimated values of around $450,000! This seems to be a solid investment. There are no other property fixers in the block or neighborhood as well. I have done some research and
the property needs a new roof. However, I still think this is a good REI.
The owner does not live in the property anymore. He has about $100,000 left in mortgage pmts. No other outstanding mortgages. He wants to sell the property as is, but he knows that he won’t get the current market price of $300,000. He’s also behind in mortgage pmts. The property needs a lot of work inside and out, new roof, etc. However, there are no structural damages such as foundation, soil, fire, floodings of any kind. My questions is what would be a reasonable price for this property “as is”. I would think that a reasonable price would be around $200,000 to $250,000 for a REI. This is my first REI Deal so here are the following scenarios:
Refer/pass this property to a REI for a “finder’s fee” of around $2,500
Work with another REI that specializes in “Contract Assignments”. He claims we can both split the profits after the property gets assgined under contract to another REI. He claims that the assignment fee can be of around $25,000. Is this legal?. It seems like we will be like brokers or middleman to pass on this property to the actual REI Rehab. In this case, can we call ourselves REIs? The other REI that will help me do this deal will do all the paperwork and transactions to get the REI Deal done.
Do the “Contract Assignment” on my own and pass it to the REI Rehab for the assignment fee of $25,000. I have also read cases where people have done Contract Assig. with fess of as much as $50,000! How much or is there a limit on an Assig. Fee? I know if I do this on my own, I would have to do all the paperwork, transactions of my own. Honestly, I’m not very familiar with all these steps, but I’m not afraid to get it done on my own for max. profits! I have read that in California this is completely legal? Not sure.
Options No 1 & 2 are the fastest and safest for me. Option No 3 will take more time and carefulness. How long does it typically take to do a transaction like options 2 & 3 before I see any checks? I would appreicate any feedback and thank you very much for your time. God bless you all!
Christian B. O’laarte
REI Property/Note Scout
B.S., Business - 2005