A seller called me from ad in paper. She has already arranged for short sale with bank. Home ARV 380K discounted offer 300k. What should i do at this point? I’m a brand new investor.
Howdy Jawdoc27:
This is an expensive house to be your first deal. The monthly payments are going to be at least $2500 per month while you wait for a buyer or tenant.
I would want to know the condition of the property and have an estimate of the needed repairs. $80,000 sounds like a lot of equity until you start adding up all the expenses involved in buying and fixing and reselling. Just the commission alone is over $20,000 if you have to list with an agent and sell on MLS. If you have to borrow from a hard money lender the points will be another $20,000. Carrying costs at even $2000 per month for 6 months is another $18,000 and if you can get by with $20,000 in repairs you will net $2000 profit for 6 months work and risk. If you can sell it fast at the ARV value without hard money lenders and without an agent and without much fix up you could have a good deal.
You have a lot of homework. O yes I forgot that hard money lenders generally loan 65 to 70 % of the ARV so you will need to suppy the balance of the purchase price if you use hard money lenders to do the deal.
Hope some of this helps
Hey tedjr
Thanks for your immediate reply. The home is in excellent condition, no repairs
needed. The owner is 4mos. in arrears and has til 12/31 before the foreclosure
process begins legally. By the way my exit strategy is to lease purchase if I can’t get a quick sale. The house is drop dead gorgeous.
Jawdoc27
Run your numbers and see if its worth it!!
Sounds like all the hard work is done for you…make sure of your holding costs!!! Then do it!