Help! Dilemma on my first property

9 Replies

Hey guys,

I'm looking for a little guidance on how to approach my first deal...

The property is my part of town, so I'm pretty familiar with the area. The property is listed for $35,000 but considering the work that needs to be done on it, my agent and I are confident that we can get it for around $24,500. ARV seems to be in the range of $55,000-65,000 (its been hard pulling decent comps for fixed up homes for this property). It's likely going to need a new roof and HVAC...those are the more expensive repairs. Other than that, the cosmetic work needed consists of new floors to replace the carpet, new walls, restroom, and kitchen appliances. My uncle can do a lot of the cosmetic work, so that will save some money on repairs.

That said, my initial plan was to wholesale it to another investor if the deal was in fact a good one.  Now, however, after reading a lot on BP and also The Book on Investing in Real Estate with No and Low Money Down, I realize that there may be other options that could work out better for me.  

I am currently living at home (my parents' home) and have never owned a home myself.  I can't help but to consider this to be an opportunity to do so, and get started with investing at the same time. I don't think traditional financing is an option for me considering my credit history.  But, after reading and learning, I thought that maybe seller financing could be a solution, or maybe even a lease option.  However, from what I gathered in my readings, seller financing and lease options were executed when the investor will be using the property for rental income.  In my case, I will want to live in it for maybe 2 years, and THEN rent it out.  

My question is, is this a viable way of going about my first real estate deal? Are there better or more creative ways to make it happen?   I greatly appreciate you taking the time to read this and any help you can give!

Account Closed

is it free and clear of mortgages? If there's a mortgage what's the balance due, what's the payments, is it fixed or arm, is it govt, conventional or private?

Once you know what kind of existing financing you look at a purchase offer, maybe subject to, rough, but it needs work never do a lease option

Think about doing a joint venture with the seller, it is also called the cooperative rehab , using private lender money to fix it, giving a note for their equity, buying it and getting on title, fixing it and resell ing it, then you would pay the equity to the seller

Good luck!

@Brian Gibbons thanks for the advice Brian! I understand most of what you said...however could you clarify what you mean when you say "giving a note for their equity, buying it and getting on title"? I don't completely follow...How would that work? 


Great advice Brian. And I agree...If your seller is motivated, there are no liens on the property and the mortgage payments insurance and property taxes are manageable for you then a lease option or subject to deal could work. If they own the property outright, don't need the cash up front and can do owner financing even better. Even if they do have a mortgage on it depending on what the property could rent for you still may be able to work out a sandwich lease option if you have established a good rapport with the sellers and the circumstances are right.   

Originally posted by @Brian Gibbons :

Account Closed

is it free and clear of mortgages? If there's a mortgage what's the balance due, what's the payments, is it fixed or arm, is it govt, conventional or private?

Once you know what kind of existing financing you look at a purchase offer, maybe subject to, rough, but it needs work never do a lease option

Think about doing a joint venture with the seller, it is also called the cooperative rehab , using private lender money to fix it, giving a note for their equity, buying it and getting on title, fixing it and resell ing it, then you would pay the equity to the seller

Good luck!

Originally posted by Account Closed:

@Brian Gibbons thanks for the advice Brian! I understand most of what you said...however could you clarify what you mean when you say "giving a note for their equity, buying it and getting on title"? I don't completely follow...How would that work? 

 If there is no liens, create private first mortgage for equity

If there is a first Morgtage offer a sub2 plus a 2nd mortgage for equity

Here is an example

200k needs 10k in work no loans

Compare

70 percent X ARV 200k less repairs 10k = 130k offer

Vs

200K

- 20k costs to sell (commissions, closing costs) 

- 10k repairs

- 10k JV fee

------------------

$150k note to seller

Buy it private first mortgage, no payment 4 months, fix it, list it, resell it

At closing pay off note to seller, payoff note for rehab, pay off note to you the REI for 10k

Usually the seller make more with the JV than wholesaling offer on a light rehab deal

Account Closed

I coach folks one on one in real estate investing and I really want people to:

Pay of all your credit card debt

Pay of all your student loans

Do joint ventures and lease option assignments for 12 months, no banks, no credit, 

set a goal for $100k in 12 mo

Get your real estate sales license

Build a team of one real estate broker, one real estate contract attorney, one CPA accountant

Get a LLC and a sellers website (legal zoom.com and www.oncarrot.com)

Learn how to negotiate with Sellers, offering a cash offer and one or two terms offers

If you do all these things you will get a fast start