:‘(I sent a letter to a fourplex owner in distress, (first letter ever) he emailed me back and asked me to make him an offer. I have realized he is behind in tax payment, has a trsh lien and has only one tenant. In his email he said one unit needs remodeling, the rest are fine. I am working on a very limited budget. any suggestions!!! :’()
Howdy Matata:
Need more input before trying to help. Your budget has nothing to do with making a great deal on a property. I am not just saying this ti sell more books. I do not have a book for sale. The main thing it would help to find out is the loan amount. If he owes more than it is worth his hands may be tied and you will need to approach it as a short sale. If he has equity after you determine the ARV of the property you should offer just enough for him to get a few grand and get out. I have actually bought them where as long as they do not have to pay they will sign the deed over, which is sometimes best for them just to get out with the losses they have. You also need to figure just how bad the condition is. Never trust the seller and never assume anything, Make sure you can rent it once you have fixed it up. Look around for signs on other 4 plexes and call to see what they are asking. Are the rents in line with the rent at the property. What your exit strategy is and your financing method will determine what you can afford to pay for the property and the cash flow you will have as an owner. If you are buying to fix and flip and using hard money you will need to get a deeper discount. If you can go conventional and have great credit you may be able to get a low rate and keep the property as a rental. Let us know some more of your plans and more about the property. You can get it under contract before even inspecting the property. If you find it worse than expected you will have ammunition to get the seller to fix it some or lower the price to cover the unknown defects.
Thanks Tedj,
I havent spoken to the guy but records shows that he owes $100,000. The property is worth $470,000. I am not comfortable making an offer without meeting with him. I am scared that he may decline the offer and never respond to my e-mails. (I havent met him and he wanta me to make a faxed offer to him). Should I just go ahead and make that offer and hope for the best?
Howdy Matata:
Thats what I do. He has more equity than I imagined. He may not be as distressed with that balance and value. Give it a shot. LOL
Thanks a lot Ted P. Appreciate it.