first deal--flip or hold the note myself?

Question

This could be my first deal, so I'm asking about the best possible choice for myself financially.

My inlaws have a 2 story rental townhouse in a gated family community, and they want out of it so they can both retire.  This is the only thing keeping them working.

The property record shows it sold for $205,000, and I know they've got their own house on the hook for this one.  I'm guessing their note is about $160,000 currently.  Full time tenants currently who I know personally.  I'd considered doing an owner finance, but the inlaws want out, not in on this deal.

Should I flip this to another investor as an investment property or should I hold the note myself?  I'm a rookie with no assets myself right now, but I've got access to private lenders, so I'd be able to hold it.  The only reason I ask is since it's a relatively new rental property.  I'm not sure how hot rentals are to investors--would they be willing to pay more due to that?

Thank you for hearing me out here.

Jon Klaus · Answer

Yes, you must look at the most recent comps. 2005 might as well be 25 years ago. Also look at comps as close as possible to the subject.

Ben Hughes · Answer

I can't see anyone doing this deal.  I'm not seeing how you would make money with your current numbers.

Jon Klaus · Answer

I would not do this and very few experience investors would either. It would be nice if others weighed in here though, since I'm just one guy in a different market.

I don't know Phil Gove's system, but some here do.

Generally, I'd stay away from systems and gurus.

Alfred Green · Answer

Thanks Jon.  Those numbers are actually what I needed since speculation, for me, is a time waster currently.

I originally saw this as an Assignment of Mortgages deal, using Phill Grove's system.  I've been looking over the blogs here only since they speak of risks to the investor.

Risks to the investor.  Are there any?  Mind you, legalese blurs my eyes after a while :-)   Any simple answers?  LOL!

FYI, I'd be splitting this with a team who actively do AMPS deals.  They insist on full disclosure to all parties,  even closing with a lawyer.

My main obstacles are the potential buyers currently who are the tenants.  It's two middle agers living off one disability check and a wealthier elder vet with dementia.  My wife shared when he dies, they'll have it rough, as they're not good time or money managers.  That---is my main concern in this.

Would you even touch it?

Jon Klaus · Answer

Paying $150k or so, won't cash flow with just $950 per month in rent. If you are getting 1% per month in rent you are doing better. My rentals average better than 2%, but they are all about cash flow and I bought them when the blood was in the street.

Occasionally there can be a reason to buy property that won't cash flow, but that's for advanced or speculative strategies.

Alfred Green · Answer

Jon,

So this is not a good choice for investors?  I ask since you see possible deals everyday.  And I'm picking your brain to learn myself :-).

Thanks for the help.

Alfred Green · Answer

Update:  I just looked up realtor.com, and 2 houses are for sale on the street.  It's a cookie cutter townhome community.

One's gong for $165,000, and the other for $169,000.

Alfred Green · Answer

Jon,

One last key question:

I've been looking for a good program/guide/mentor to follow, have contacted a few in the last week, but replies have been very sparse.

Besides doing cold calls, how could I learn part-time how to do deals?  There are loads of options---and I'm prone to information overload---so I'm wondering if you have any good, tangible ideas.

For one, I'm willing to do a few splits initially if I had a good investor to learn from.  I know the first deal carries the most apprehension.

Alfred Green · Answer

I found out from my wife today they do have it listed.

Knowing local realtors are geared to local buyers, I shared that investors abounded much more than local buyers.  And that's my fuel for pursuing it.

Jon Klaus · Answer

It doesn't appear to be an investor deal unless it could be a short sale. That could work if your in laws are distressed and can take a credit hit.   That is, if it's worth the lower end of the range. If it's the higher end, maybe they should just list and sell.

first deal--flip or hold the note myself?

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