Good morning all,
Here's the deal in a nutshell. All advice is welcomed:
A "motivated" seller calls me based on an Internet ad. The seller has a rental property that is currently occupied and brings in $350 positive cash flow monthly. For personal reasons the seller must sell the property. The seller is asking 48k. Seller listed the property however due to the need to sell contacted me personally. A modest estimate of ARV is 52k
I met with the seller to take a look at the property and although the interior is dated the seller agreed to include all appliances in the deal. The roof is in need of repair and seller stated that they had a volunteer service who would replace the roof for the cost of material.
Now the seller knows that the bank will take no less than 30k and then there is 5k in back taxes. Outside of the 2k+ in agent fee's the seller is still looking to walk away with cash although the property is so upside down. I was looking to wholesale the property but may buy and hold myself. Though I understand the sellers intent, I plan on offering less then the asking price and go from there. By the way the house has been on the market for almost a year and before the seller re-signed the agent agreement the house was listed for 40k. Any thoughts on this deal?
I'm confused. You say that the house was on the market for almost a year at 40k (and apparently didn't sell), and now the seller is asking 48k? Plus the ARV (After Repair Value) is only 52k and it needs updating inside, a roof repair, and has 5k in back taxes? Doesn't sound like much of a deal at the asking price.
You also mention a short sale, but don't say how much the seller owes. Regardless, the bank isn't going to take a big hit on their end and let the seller walk away with a profit on his end.
There's no deal. The owner will Not receive any cash in a short sale, and you'll all sign affidavits to that effect. If any relocation is paid, it will go to the tenant.
Thanks Kyle J., and Wayne Brooks.
@Kyle J. From what I can tell the seller bought the home 7 yrs ago for 140k. My guess is the seller owes 90-110k. According to the seller the bank wants 30k minimum. I wasn't going to update the interior immediately as the current tenant seems to be good with the current situation. I was thinking about the positive cash flow as a win. But you make a great point for future plans. It would be a dud deal if we invested more money for renovations. The neighborhood is stable as far as finding renters is concern. I appreciate your advice as I learn.
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