How to approach a motivated seller

Question

Hello,

I have been studying creative real estate for a couple of months now and would like to take a step further. My boyfriend's aunt wants to sell her house in PA, because her tenant does not pay the rent. The aunt lives in NYC and has her own business here. I live in NYC too, but I am thinking about moving to PA withing the next year or so. She got this house for $40K and is willing to take $20k for it. She is motivated and desperate to sell and I would like to take this opportunity to buy it. However, I don't have enough money, except for less than $3000 in my 401 k and $2000 in a joint savings account with my boyfriend. Also, I don't have a real estate team (agents, attorneys, brokers etc), and I am not sure what would be the best creative strategy I could offer her. Any expert advices will be truly appreciated.

Thank you very much.

Michael Henry · Answer

Think out side the box: Is there something else she is willing to take other than money?

Jason Krick · Answer

@Melaines Gil If you are still looking for info, I sent you a pm and colleague request.  I will assist if I can.

Melaines Gil · Answer

@Steve Oxenreider

Hey Steve,

Thank you so much for telling me this. Coincidentally my dad was telling me the same thing today. I am def doing more research on this. But the bad thing is that I don't know anybody from Reading that could help me. I haven't even been there myself. But thank you very much, I will be more careful before proceeding.

Steve Oxenreider · Answer

I would be very careful purchasing a property inside the city of Reading. There are some very bad areas. I would recommend contacting someone with some knowledge of the city before moving forward with this deal.

I live within 15 minutes of the city and I avoid it like the plague. That being said, there are plenty of investors that work in the city, perhaps you could work out a deal with one of them?

Jessica Stiner · Answer

Melaines,

If they don't pay, they should be evicted. I recommend looking up your state's landlord/tenant code and reading it. You need to know the laws, if you plan on managing your own properties in the future. Good Luck!!!

Melaines Gil · Answer

@Jesse

@Jesse T. undefined

Yes, Jesse, you are right. I have been getting some information (from trulia.com) about the rent of other properties around this neighborhood, according to the site, the average rent is $600, but similar 2 beds 1 ba houses are renting for $700 - $1000. I am not sure about the real problems that she is having with this tenant, but I will find that out today when I talk to her in person. Also, according to trulia, the value of homes around this area is $56K. She paid $40k cash back in 2003. But, of course, I won't relly all my research on this webstie. I will continue my research after my meeting with her.  By the way, what would you suggest I do to get more accurate information about this property value?, regarding evicting the tenant, I think these people are taking advantage of her because she is not on top of her property, she barely goes there, and she does not treat this property as a business. Apparently she knew these people from before, and rented her house to help them.  If I get this deal and I keep the tenants there and actually let them know that I am on top of them, do you think there will be a need for eviction?

Melaines Gil · Answer

@Josh Morales

what are transfer tax? and I would love to connect with you once I have this deal. Thank you so much for your offer.

Jesse T. · Answer

Before you put an agreement in writing, I would confirm the condition of the house and that the rent should be $700.  It may be part of the reason the tenant isn't paying  might be the listed rent was high and the only applications were potential deadbeat renters.  In addition to the rental rate, you want to confirm the property value - it could be that she paid 3 or 4 times what it is worth, so getting it for 1/2 what she paid would still be overpaying.

Also I would include in your calculations evicting the tenant and at least 6+ months of carrying costs.

With a loan of 20K, even over 5 years at 5%(which is a pretty generous rate for the seller), your total payment should only be a little over $500(including taxes and insurance).  A 10 year loan would be around $350/month.  With seller financing it is likely that you will pay the taxes and insurance separately vs. paying into escrow.

Melaines Gil · Answer

@Jessica Stiner

Thank you Jessica, I haven't been able to speak with her but my boyfriend did. He did go into further details about the reasons why she wants to sell or if the house needs repairs. However, apparently the owner mentioned that the renter keeps the house very well maintained. Of course, I am looking foward to meet with her and have a serious conversation to touch all the details before giving her an offer. I am following your advice.

Thank you. Happy New Year!