Newbie Deal Help

8 Replies

O.K. need BP help on another deal.  I have a seller that owns a property free and clear, except the $4,500 Tax due, so free not clear. It is a 2/2 that he did a $30k renovation on 2 years ago. It's worth $63k according to Zillow. Tenant is paying $650 and moving out this week. Comps are $70K- $90K - $113k. Cosmetic repairs less than $800. (Waiting on Pictures to verify)

He wants 40k
Wants to Quit Claim to get most back (no closing fees)
He wants to walk away with 32.5K after tax is applied to $40k
My fee- 3k

How would you do this deal? What is the better way? I see that he is trying not to go under the 30k he has spent, so at least $1,500 of that other 3k is negotiable.

For the smart investor this is a $1000 down and pay owner $300 month while investor cashflow. I am not in position, AT ALL" to do that yet. The rents in area are now $800-$950. 

Seller is not motivated. I buy these all day long-around $8,000-$10,000. Just bought one  today for $3,300. Don't be the motivated party.

Originally posted by @Joseph Ball :

Seller is not motivated. I buy these all day long-around $8,000-$10,000. Just bought one  today for $3,300. Don't be the motivated party.

 Thanks Joseph

Originally posted by @Joseph Ball :

Seller is not motivated. I buy these all day long-around $8,000-$10,000. Just bought one  today for $3,300. Don't be the motivated party.

 Do you buy them as-is? Do they need rehab?

Originally posted by @Michael Williams :

O.K. need BP help on another deal.  I have a seller that owns a property free and clear, except the $4,500 Tax due, so free not clear. It is a 2/2 that he did a $30k renovation on 2 years ago. It's worth $63k according to Zillow. Tenant is paying $650 and moving out this week. Comps are $70K- $90K - $113k. Cosmetic repairs less than $800. (Waiting on Pictures to verify)

He wants 40k
Wants to Quit Claim to get most back (no closing fees)
He wants to walk away with 32.5K after tax is applied to $40k
My fee- 3k

How would you do this deal? What is the better way? I see that he is trying not to go under the 30k he has spent, so at least $1,500 of that other 3k is negotiable.

For the smart investor this is a $1000 down and pay owner $300 month while investor cashflow. I am not in position, AT ALL" to do that yet. The rents in area are now $800-$950. 

 I don't really see a way to do this deal without some money involved.  Like others have said it doesn't sound like he is motivated, he just wants to cash out basically. 

The negatives I see are that there is a $4,500 back taxes owed, and there is no tennant at the end of the month.

One option I can see is to do a $0 down seller financing with either payments to the seller beginning after the back taxes are paid (you would need to find out if there is a tax lien on the property already first), or preferably the seller has to bring taxes current. However this means your property wouldn't cash flow or at least not very well for several years, or you can flip it and payoff the seller and you keep the difference.

Second Option I can think of to get in this deal would be to try and wholesale it to another investor, but I think you would need to get the price down to around $20K tops before they would bite.

Third would be to look at a hard money lender for the funds, do the deal at $25K to cover your costs to get taxes current then refinance with a bank or credit union.  Then you can decide if you want to rent it or flip it.  But make sure to talk to the banks first and find out their requirements and your eligibility, then talk to hard money and look at terms and go from there.

Am I missing something here??

@Michael Williams , do your due diligence on the property. Public records/preliminary report should give some indication as to why the owner wants to quit claim. What is he not telling you? Quit claim is a no go.

If you are wholesaling, you need to know what "your" market is like in that area of "Georgia." If you are wholesaling, what percentage are flippers in the area buying at (60%, 65%, 70-75%)?

Get the correct ARV (be conservative, on the low side), the correct repair costs and the percentage flippers there are using. From that number, subtract the back taxes, your fee and closing costs (assuming your buyer will not pay closing costs). Also subtract any additional costs that the prelim. report will reveal. Is this final # equal to, less than or more than what the seller wants to walk away with? 

If the final # is less than what the seller wants, then see if he will meet you at that price. If it is not a win for the seller, yourself and the buyer, then thank the seller for his time and leave your contact info with him. 


@Jerry Poon  Some need rehab. Some are pristine. I never buy major rehab. Usually paint, carpet

@Joseph Ball  Do you know of any turnkey sellers in that area?

@Jerry Poon  I sell some turnkey. I do very creative deals. (This is not a commercial.)

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