Possible First Deal, Any Advise?
I got a call lastnight on one of my ads from a seller who is leaving the state due to a job transfer and wants to unload his house. This guy was desperate, even going as so far as to say that he'd take a loss to get rid of it.
He owes about 70k on it, its probably worth in the 75-80 range. He's owned the property for 2 years. PTI on it is about $860. Its a 2 bed, 1 bath it move in condition. Its in a middle class neighborhood with decent rents around it....because its only a 2 bedroom house the rents are probably lower than the PTI
The guy knows that I'm an investor and doesn't care, he just wants out of the house. Do you guys have any suggestions on this?
I was thinking of doing a l/o for the 70k then attempting to sell for 85k with 5 k down from the t/b. Does that sound fesible?
Any help would be appreciated as this is my first deal and I don't wanna screw it up 
Bryan
You stated he wants out. If you L/O and give him money and he leaves town. You may lose your money. If he walks then what? Is he behind on the mortgage or taxes?
Lori
[addsig]
It almost doesn't sound worth it.
That's a good point, find out if he's behind payments/taxes first.
First check out other similar properties around the area and see what the rent rates are at.
Here's would I would try:
You are investor, so tell him that. Tell him this is the absolute best you can do for him. Offer l/o with option to sublease @ 65 in 2 years renewable for X years. Guarantee the monthly payment if it is at or below other rentals/pmts in the area. You begin making payments after 2 months. Make sure he's not behind on payments.
Here's what I figured:
If you get it for 63 in 2 years he won't really take much of a loss (or a small profit?) because his loan balance will go down.
You can find a QUALIFIED tenant/buyer to place about $5k down, pay $925/mo and purchase in two years for $83,500.
So you make 5k up front
$65/month
and about 20,000 in the end
The only problem I'd face if it were me is finding a qualified tenant/buyer for such a small place.
I'm not an expert, but I hope that helps!
So how much do you think you can get for it as a rental?
The guy understands that he's upside down here and is offering to pay you to take this dog off his hands. That is a motivated seller and a motivated seller is a good thing.
So, Options:
Offer him $50,000 cash now. He takes his loss in a lump sum and moves on.
Offer to take title subject to his financing, subtract what you think you can get for rent from the PTI and let him pay you the difference every month. You manage the property, collect the rent and his payment and pay the mortgage. He gets to move without worrying about his credit score going in the toilet due to a foreclosure. Limit his liablity to a couple of years and raise rents or sell in that time.
Offer to Lease/option with a lease payment slightly less than you can rent the house for and an option price of $70,000. He gets to make up the shortfall himself every month. Try to get a long time on this plan-- say five years. Hope for some appreciation in the meantime to make your option price look good.
I could probably think of a couple more if I understood more about the sellers concerns, does he worry about owning this dog after he leaves town? Cash him out or by land contract. Is he more worried about how much he's going to loose or the status of his credit report.?
The trick is to find his fear and structure your deal to allow his fear to be managable.