Newbie In Need
I am a New Investor in the RE Market. I have found a few good deals in my area. I have a motivated seller that is willing to work with me any way possible on house that he is trying to sell. The house needs ALOT of work. The Seller is willing to hold paper or take 6% off the asking price. Could someone give me a since of direction as to what steps to take or what will be a good offer to present. Any help or advice would greatly be appreciated!
Thanks,
AAO
Can we have some specifics on the deal as it stands now? If it where me I would have the seller hold the note...especially if your lender allows it to count as part of the downpayment (ie lower their LTV).
What do you plan to do with the Property??? Flip it or Fix it and resell it?...what are the estimated repairs? the comps in the area? You have to offer way below the after repaired market value to have that profit margin.
I would like to Fix-It & Sell It. the house has had some storm damage. Before the storm damage the house was valued at 112,500. The Comps in the Area range from 92K - 110k. The asking price is 72K. The Estimated repairs are between 17K -20K.
Considering what you have said I would have too say that if you factor in the asking price, plus what the cost of repairs are, your already above 80% ltv. In any case the problem with repair is that sometimes a repair may look one way during initial inspection, but as the repairs begin sometimes new problems arise. So you if you dont know to what extent the storm damge is, then I would advise you to look at other opportunties. Remember there are always new opportunities everyday. So dont allow yourself to be overcome by you emotions. Youre an investor, so if it doesnt make economic sense, step back and analyze the situation one more time. So in other words, walk away if it doesnt benefit you. [ Edited by jaguirre723 on Date 10/29/2003 ]
"If the numbers don't fit, find another shoe to live in."
Eric & Rosa
[addsig]
I tend to try to stay away from major flood, fire damage, as posted in a reply earlier, there is a lot of hidden damage that could outweigh the cost of the house.
I agree, number are too close for an expensive rehab.
I would offer more around $55,000 that would put your ARV more near 65%.
I agree with the other posts on keeping your LTV low.
I might suggest taking this property "subject to the existing financing" for 1 year. THis would allow you to get into the property cheaply and use your cash for repairs etc.
Seller financing is only good if you can make $$ on the deal.
I somewhat disagree w/the majority here. My first property was similar to this, but not on the market I approached the owner to sell since the home was vacant. Anyway, it too had water damage, mold, etc....a very scary first property to start on, and I'm still working on it. However, my estimates were somewhat sketchy as yours and I went w/my gut due to the size and location of the home which I thought would payoff someday for sure. Well, I was right. I just had a realtor come and look at this home this week to see what he would list it for...I would then sell it myself....and to my surprise its now worth 100k more then I paid for it 6 wks ago. My advice, go with you gut and don't be afraid of the repair but do offer a lower price then what is being asked. Now anyone want to tell me how to do a tax exempt exchange or should I hold on to this gem for a couple more years and cash in even bigger?
dsharon
I can help walk you through how to do a tax free exchange, if you'll call me.
Don't want to rile the bouncer* by tooting my own horn too loud or publicly.
* I hear he's big, ugly & meaner'n heck
John Merchant
(253) 228-2277
You are playing the 2 ends too close together.
Its hot out there,
About selling it yourself.... I'm looking at picking a house up tomorrow that doesn't need a thing, the owner is just tired of trying to sell it themselves (already offered it at a discount) Now they tell me they will let me have it at a much larger discount just to be done with it.
All I'll have to do is list this house. Hate to say it, but we REALTORS do have most of the good buyers
now I need to find a forum on being "contract purchaser