Jax Newbie - Defining "deal"
I just wanted to post a deal that I will NOT be following through on. I want your opinion on if it could have been made into a win-win with some creative thinking.
Property was purchased earlier this year. Owner bought it for daughter but now just “fluffing” for resale. So far just paint, carpet, and tile in kitchen are the improvements. She has tried FSBO for 3 months (using the service) with no real interest. She’s thinking about putting it on the MLS which should kill about $7k of her profit.
Original Purchase Price - $82,000. (low end of comps of 80k to 93k)
Asking price $112,500
My calcs $82,000 – 10% down = financed $73,800 which equals about $620 @ month with 30yr at 7% + PMI. Since it was less than 6 months ago it was purchased, very little principle paid down.
Since the seller is asking for $30k profit – “fluffing” and the mortgage is already above 80% FMV I don’t feel there is a bargain waiting in this one.
What options could I present to make this a win-win? Should I push for Lease Option and in turn find a L/O buyer? I don’t think Subject-To would be of much help since my buyer would have to be willing to pay market. I wouldn’t even think about financing this in any way. HML would be too costly and no way I could go conventional with my credit.
If you are going to flip the proeperty then use this formula as a guideline:
3) Work the formula. Arv x 65% - Repairs - C/C/Cost - AF = MAO
a) Arv = after repaired value
b) Note that if and investor using a Hard Money Lender for the first time then the Lon to Value(LTV) will be 50% and not 65% as projected in the above formula
c) Repairs – use the evaluation sheet
d) C/C/Cost = carrying and closing cost
e) AF = assignment fee
f) MAO = Max. Allowable offer
But, if you decide to do a lease option then make sure you get it tied up for as long as you can to secure as much appreciation as possible.
Since your numbers are so close togeather I only see a lease option deal out of this. Flipping would not work since the house is already repaired.
Best of luck,
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Larry Brusatori<br>
[ Edited by joel on Date 09/09/2003 ]