I HAVE A PROPERTY, NOW WHAT?!!!
I have a property under contract, and I need to know what is the best, and professional way to present it to investors. And let's say they go for it. That's great and all, but then what?
I'm working w/ a mentor, but, I'm interested to see what other people have to say.
Please respond A.S.A.P
Thanks,
Chris1220
Give up some of the specific deals. Then we can give you our opinions.
property is listed @ 35k , and has an ARV of 60k. It's need some minor work in the kitchen and bathroom, about 8k worth of work, worst case. Owner is selling due to divorce, relocation, and inability to do repairs.
well, because the arv isn't that much higher than your amount, your only going to be able to walk away with 7-10k minus closing costs, for it to be considered by investors. I would put an add in the paper saying "Attn: Investors and Rehabbers", then describe the property. Also, look in the paper or bandit signs that say "we buy houses" Those are also investors. Everyperson you call and calls you, write down their name and number, even after the property is sold. You want to expand your buyers list as much as possible, for future properties.
Eric
[addsig]
was it listed for 35k or is that what you got it under contract for?
if property values increase quickly out there, then sell it on a cfd or lp and get a few years on it to milk it. if rent is fairly high, use it as a cash flow property. if neither, fix it up and sell it quick for slightly under market value - about 53-55k.
good luck.
Chris,
Welcome to the forums, I am sure you have learned quite a bit in the last few weeks.
If this is one of your first deals, I would flip for several Gs. Learn some more from your mentor as you bring him or her a few thousand dollars.
Put an ad: "Handyman Special, Need cash buyer", then the details. Like Birddog1 said, keep everyones name and talk with them, what do they do, how do they do it, etc. Learn from everyone that you come into contact with.
Quote:
On 2003-11-25 15:43, chris1220 wrote:
property is listed @ 35k , and has an ARV of 60k. It's need some minor work in the kitchen and bathroom, about 8k worth of work, worst case. Owner is selling due to divorce, relocation, and inability to do repairs.
chris -
based on the info you supplied I don't really see that great of a deal here. When I buy fixer uppers I make sure that I'm purchasing at no more than 65% LTV (loan-to-value?. That includes purchase price, repair costs, holding costs, advertising costs, etc.. Doing the math you're at just about 72%...and that's not including your holding costs (got to make those payments while you're doing the repairs, right?) and adverstising costs to sell the house. Also, what about closing costs; are you paying those or buyer. Not trying to confuse you, but just trying to get you thinking ahead of all the costs thats involved. Make sure you know the figures before you dive into this deal. Good Luck!!
Based on the numbers that you have given you need to be ready to rehab it yourself. At that LTV on a low end property I would not buy it much less pay you a few G's.
I recomend that you read this.
http://www.thecreativeinvestor.com/Article435.html&mode=&order=0&thold=0
You guys and gals are AWESOME, thanks for all the great advice!!
Quote:
On 2003-11-26 03:53, lacashman wrote:
Based on the numbers that you have given you need to be ready to rehab it yourself. At that LTV on a low end property I would not buy it much less pay you a few G's.
I recomend that you read this.
http://www.thecreativeinvestor.com/Article435.html&mode=&order=0&thold=0
That article is of course from a rehabbers point of view. He wants to make 22K profit on a deal and thinks the finder should only get 2 or 3 K.
I have always found my own deals or just used real estate agents to find them. I then do my OWN due diligents and don't depend on someone else to do them for me as the author of that article expects them to do.
Keep in mind that this is not a property that I will bw rehabbing myself, but one I will be flipping to another investor.
You will have a hard time finding an investor to flip it to. Reason being the cost to purchase and rehab is over 70% of ARV.
Most rehabers including myself will not buy when our purchase and rehab cost go over 70%. Reson being we have to cover our cost to buy, rehab, cary and sale plus we have to have a some extra room for the unexpected.
The simple reason for 70% is that the max Hard Money Loan is for 70% of ARV. So to limit my out of pocket dollars I need to stay below that.
On this deal the purchase price and rehab expenses are almost 72% I would not buy it with those numbers.
Not that your way off at 33K it works.
But why not list it in the Realty section? It is free. But I do recomend adding a picture.
But I am curious about another thing.
You say that your working with a mentor?
How did you and your mentor come up with this asking price?
He knows the area pretty well and he got comps of 4 props sold w/in the last 6 months(all within a 3mile radius)?
Were these comps in good condition and sold retail?
Or are the comps of rehab projects that were sold to investors?
You say that you want to flip it to an investor. Everthing that I have read says to use 70% (or less) and subtract your cost and that is the max that a rehabber should pay.
So how did you and your mentor determine the price that your asking for this rehab project? If your paying for a mentor they should be able to explain how they came up with a price. Perhaps rehabers in your area expect to pay 75% of ARV so your price is less than that so it will move quick.
[ Edited by lacashman on Date 11/28/2003 ]