Is there a way to create a deal for this property?

Question

I have a lead on a 1348 sqft 3/2 home that has an ARV in the 110-115k area.   Owner owes 82K.  He has tenants that will be moving out soon and doesn't want the house any longer.  He says his current rent is 1k a month.  Rentometer has that # at the median.

I am open to either flipping or renting property so all those options are available to me.

Assuming that to flip to rehab the house would need about 25k and to rent 10-15k is there any creative way to make this a profitable deal at a purchase price near 82K?

Sean

Aaron Mazzrillo · Answer

Sub2 and sell 1/2 interest to another investor for the rehab costs. Keep it as a rental. Sell when it has $XX equity. I've done similar deals several times.

Lease it for the PITI payment and record an option for the value of today's equity minus rehab expenses to get it ready. Go long term, 10-15 years on that option and all the amortization and any appreciation you may see is yours.

Robert Smith · Answer

Sandwich lease option and take the option fee for your time and paperwork to someone looking for a buy and hold and let them repair or flip.

If he will sub 2 hold the note and rent it out as a lease option and take a smaller down, $2K, and market as a sweat equity property. You save yourself the money to put a tenant in and no leaky toilet and roof calls once they are in there.

There can be a deal here but if you are looking at any deal use the MAO formula. ARV - cost to sale - repairs - profit - asking price = Max Allowable offer. Straight up without getting creative this one is a loser. You can only buy on cash, terms, or conditions, don't try to hope for the best and expect the best because you will get burned every time.

James Hamilton · Answer

Oh and take it subject to and have a private lender invest in the rehab, if they'll agree on a second mortgage.

James Hamilton · Answer

Lease option it. 5 or 10k down premium purchase price, like 125k, or appraised value at the time of purchase, premium rent with renters credit and a 2 year lease.  Most areas are increasing in value. You'll want to find that out. They probably won't buy anyhow, most don't, then do it AGAIN!! Good luck man..

Andrew Syrios · Answer

If that's what's needed for rehab, it's simply too much to have any flip potential. If you can subject to the property and the financing is great, that would at least produce a little interest for a buy and hold, but to me, it's still too tight and I would pass.

Pearce G. · Answer

Can you rehab it into a 2/1 with a 1/1 studio?  Might get you enough rent to cash flow.

Sean Gover · Answer

Thanks @Chris Seveney and @Andrew Syrios.  I knew the straight ahead method was telling me know, was just wondering if there was a more creative idea out there I wasn't thinking of.

Sean Gover · Answer

Bump.  Any help would be appreciated.

Thanks

Is there a way to create a deal for this property?

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