I’m looking for ideas regarding a possible deal I’ve come across. I’ve found a recently divorced lady who owned investment property with her husband. She got the investment properties out of the divorce and is looking to dump them and start fresh. She has a sfh and duplex. She marketed the duplex for 150K and there were no takers. She’s told me her bottom line is 135K but the tax value is 130K. It’s in decent condition but needs a little work. Great location with both sides vacant. She has no mortgage on the duplex. The house, she is currently using as her residence. Her bottom price is 135K also, but market analysis is suggesting it would retail at about 160K (per a realtor friend), the tax value is 130K. The house was built in the 60’s but one house on the block just sold for 205K and another is priced at 225K. The home that sold for 205 was built late '90’s but the one listed at 225K was built in the fifties.
Any ideas on structuring a deal with either or both of these properties? I was thinking maybe I could incorporate a discount for taking both off her hands. Not that I have that much cash or credit!
Barbara,
First thing I’d warn you about is becoming a motivated buyer. Don’t be in such a hurry to do a deal that you pay too much. Especially in Austin right now. The rental market is terrible.
It doesn’t sound like this woman is as motivated as she claims. Her actions are speaking louder than her words.
The big clue that she isn’t motivated is the fact that there isn’t a mortgage on the duplex and she still hasn’t sold it. If she really were motivated she could have it sold yesterday since it’s free and clear.
If the duplex is in such a great location why are both sides vacant? That would be my first question. How long have they been vacant? What was the rent before they went vacant? Lower that by 15% to 20% and that’s what you can rent them for now, if you can rent them at all.
Lot’s of times you’ll get this line with duplex owners. “They’re currently rented for $725 per month, but I’m considerably under market. They could easily bring $795.” Never pay based on pro-forma numbers, pay based on actual numbers. There are no current numbers on this duplex to pay based on.
As for the house, be careful buying older houses with new houses around them. It makes pulling comps hard. Why would someone buy the older home when they can get a newer one right down the street?
These are just a few things to think about. From what you’ve said, I don’t think this lady is motivated. Keep looking until you find a truly motivated seller. You won’t have to ask how to put the deal together then. It will be painfully obvious.
Thanks Stacy. I’ve been seriously looking for property since the end of August and am getting a little impatient since I haven’t found a fantastic deal. Patience is obviously a big part of this process. I’ve been working with a realtor who’s scans the REO’s or motivated sellers listed in MLS. Banks are getting close to asking price on many of the REO’s and the supposedly motivated seller’s aren’t so motivated. I’m making offers but nothing has come through. Any words of enlightenment would be greatly appreciated. I certainly don’t want to pay market for a property.