I'm still searching for a deal and have been helped out by you guys in the past to avoid some properties. Thanks for the help! I'm on to a new property and seeking some advice.
I'm looking to house hack and this property is actually a couple doors down from my in-laws house -- which might be the first reason to stay away ;) But, if the deal is right then I can handle it! The property is currently vacant and when we've driven by has had broken windows, doors, and is in a general state of disrepair from what I can see on the outside. It has the reputation in the neighborhood of being the druggy house. I talked with the owner of the home yesterday who owns it with his son who apparently is the one who has been living in the house. He is interested in selling to me but needs to have a discussion with his son prior to talking turkey with me. He didn't give me precise numbers yet but I'm led to believe that he is probably upside down in the house, though it seems he is current on payments. He has told me that it's just becoming a big problem including having insurance issues. I didn't dig too deep on that, but I assume they have tried filing an insurance claim based on some of the damage to the house that is being denied.
I'm still a newbie at this, but trying to just press forward with talking to sellers even if I stumble through it. I see two scenarios with this home. A) He's upside down but still wants to sell. B) He owes less than it's worth and I could potentially be on to something really good.
My question is a basic fundamental of being a Real Estate Investor but I've never done this before so I'm seeking advice. From the studying I've done, under scenario A I believe my options are Lease, Lease Option, or help him through a short sale. I don't know how I would be getting a great deal if I were to lease or lease option unless I signed a long term lease and somehow made a deal with the bank if they were to foreclose based on the Protecting Tenants at Foreclosure Act...don't really want to go there.
Otherwise, I could help him through a short sale, and here is my big question. How is a short sale beneficial to him, and how do I justify making an offer that is 20% ARV?
Scenario B is much easier...the house is a problem he doesn't want to deal with and I can buy his house quickly at a discount and his problems are solved. Just for numbers purposes I know he bought the house for $472K in 2006, and there is another house a few doors down that is the exact same floor plan, same lot, etc..., that sold for $327K last month. I'm not sure if he has refinanced at some point but I assume so since he almost lost the house to foreclosure in 2010.
He's supposed to call me back today so I'll keep you updated on what I find out. Thanks guys!
Here is a form to use, you need to know
What is ARV - COMPS improved value?
Get the facts....
PROPERTY INFORMATION WORKSHEET
Address __________________________________________Date _________
Location / Cross Street _______________________________Map Pg# _____
Seller _______________________Ph# ____________Alt. Ph# ___________
Listing Agent _________________Ph# ____________Alt. Ph# ___________
__Occupied / __Vacant_____ Bed/_____ BathConstruction _____________
A/C ___________Elect. Amps ________Garage _____Year Built _______
Other Work Needed ________________________________________________
1st Lien Bal. $_________ 2nd lien Bal. $_________In Foreclosure: __Yes/__No
Asking Price $_________My Offer $_________Resell Approx. $__________
Terms: __ Subject To, __ Agr. For Deed, __ Seller Fin., __ Lease Option, __ All Cash
Additional Notes __________________________________________________
That's great stuff Brian, thank you! Haven't heard back from him yet, figured I would give him the weekend and then reach out on Monday if I still haven't heard anything.
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