I took the leap and started to market and the phone is ringing…both are in foreclosure. The second deal below goes to the steps on the 14th.
I have two deals pending…both owners are willing to walk away and let me try a short sale. The problem is that both have a good chunk of equity. I dont want the BPO to come back higher than the amount owed.
1st house - owes 86K and is worth 140K. No repairs needed. The house is in great shape. Should I wholesale and move or or short sale?
2nd house - owes 78K and the home is worth 120 ARV. Needs about 5K in work. Carpet, door and window. The homes in the area appraise for 125 to 150K, the home next door is on the market for 55K. I am digging it to what is up there. Any ideas here…short sale or wholesale.
Any input would be great. I am brand new to all this.
Good job so far!
How much are the arrears (back payments) on the properties?
Based on the equity you have in these deals, you should line up this additional exit strategy.
If the seller is willing to walk away, you can make an agreement to find a buyer who will take over the payments. They have to bring enough cash to pay you and also catch up the loan.
With that kind of equity, you should find a subject-to buyer, someone who you can assign the contract to, or heck you might even find a backer and catch the payments up yourself and refi it out later after improvements.
Depending on your exit strategy, you can keep it for cash flow or find someone else who would.
I say this instead of the short sale because you could lose the deal before they approve and there are already so many elements of a good deal: equity, seller willing to walk away, little/no repairs…
Deal’s pretty good as-is and your time investment in marketing for a buyer might be good while negotiating the short sale.
So try both. Use the subject-to as a backup to the short sale in case it doesn’t work out. Then you can exit another way.
Again, great job!!
A few questions to keep in mind
if the homes have that large of an equity spread why haven’t the owners just sold the homes themselves? The reason I ask this is typically people don’t want to give up both equity and credit. Especially equity amounts that are that High.
If the equity spreads are indeed that high then a short sale could be fairly difficult because banks don’t just give the homes away in many cases.
Why is the neighbors home listed at 55k and not selling and the home you describe has a $120k value.
i’m new to investment real estate. infact i just completed robert allen’s course. i feel confident in doing deals but there are a few things i wanted to know before i get started:
- when making an offer, should it be verbal or in writing first?
- when filling out a purchase agreement form, do i put the asking price or the negotiated price on the contract? does any of you have a sample contract that i can look over? i’m more of a visual learner.
- what part(s) of the purchase agreement should i focus on excluding the obvious(i.e property address, name of both seller and buyer., etc).