I recently came across an opportunity (like today) to purchase a SFH for $50,000 cash. ARV is approximately $150,000 conservatively. It needs less than $10,000 work. The owner inherited the home via a death in the family early this year. I have checked the tax records and verified he is the current owner and taxes are up to date. He wants to move ASAP. I want to be protected and have not done a deal this way. What is my first step? I called an attorney who suggested I get it under contract for $300. Is that the only way? This is an off market deal and no agents are involved. I have the number to a title company but wanted to check in with some pro's here on BP before I have this deal taken from me. Please Help!
Get it under contract.
Order title report and schedule closing.
You absolutely want title insurance, many people never do the probate thing completely right.
Assuming everything checks out, bring your money and close.
Thanks @Wayne Brooks ! I am on it!
@Michelle LaRue Agree, get it under contract ASAP, that attorney should be able to provide a Purchase & Sales agreement. It should have the standard contingencies (inspection, clear title, and if needed, financing). Then you'll have some time to do your due diligence.
Good luck and keep us updated!
Thanks @Tom S. I am working hard on that. The attorney I spoke with isn’t a RE attorney. Is there a way for me to find a contract on my own (I.e. Internet) or should I use an attorney?
@Tom S. my initial internet searches made arguments for both DIY and using an attorney. Hence my confusion.
Did you find the wholesale purchase contract form on this site helpful. It gives you the needed paperwork with an out close if you want to wholesale instead of rehab.
Thank you @Lisa Kovac. I plan on calling the title company in the morning. I just heard about this deal late afternoon and by the time I reached out to the title company they were closed. I will do that first thing in the morning and I totally forgot about the forms on here. @Dave Mackey I totally forgot I could search that form on BP. Thanks for the reminder. My brain is moving so fast to get this done and done correctly! Thanks for your support.
Thanks @Andrew Brannick ! Fingers crossed.
Let me ask Have you actually been in the house and looked it over with a contractor or carpenter ?
@Dennis M. I have not. It is located in Chattanooga TN and I am in Atlanta. I just heard about it yesterday. My property manager is neighbors with the seller. I trust his judgement and wanted to get it under contract ASAP before someone else came along. I will go see it as soon as the contract is signed and before I spend any money. Any suggestions?
@Michelle LaRue that’s awesome. Once you get it under contract maybe let us know how you found the deal.
@Michelle LaRue Sounds like you've located a contract to use which is great to hear. Keep us posted on how it goes and good luck!
Do you have funding available to close quickly? If not, it sounds like a prime candidate for seller financing. I did a deal like this once where I closed for about $2k with the seller holding an interest only note during reno and sale. Let me know if I can be of any help.
Hi @George Randall , I am going to fund it myself. He signed the contract and I am waiting on title search to come back. Fingers crossed. That is an interesting way to get it done though, I will remember that. This seller is motivated by cash only.
Update: Ok full story....
I have a rental in Chattanooga and my property manager, Ronie, called me about his neighbor that wanted to sell his house quickly. The seller inherited the house in February after the passing of his mother. Unfortunately, the seller is on drugs and initially agreed to $50,000 sale price to close ASAP. The ARV is between $150-170K. I agreed to the $50,000 and (thanks to all of you giving me advice here on BP) found a contract on here and had it signed. I immediately called a title company and began the title search. The seller had Ronie call me every day (because the seller doesn't have a phone) asking for a cash advance. I was firm in saying no stating that I would not do anything until the title came back clean. A couple of days passed and Ronie noticed a new car parked at the house. It was another investor. He offered the seller $65,000 cash and $1000 on the spot. Ronie rushed over and reminded the seller that he was already under contract. Now that the seller had been offered $1000 cash immediately he was even more persistent that I give him cash. I held him off until the title cleared (the next day), left work and drove to Chattanooga to give him cash...on one condition. I told him I could no longer give him the $50,000. Before I suggested a price he said $39,000 with $1000 non-refundable earnest money cash. I said yes! Scared to death and eager to protect my investment I drew up a new contract and drove to Chattanooga had him sign it, notarize it, and gave him the cash. I have been nervous since then that something horrible would happen but I am happy to report that I closed the deal yesterday. The seller has his money and I own the property. The only problem is, now what? I have called an agent to come and check out the property and give me more comps and suggestions. My plan is to flip it. I printed off a checklist from BP and as far as I can tell the work is all cosmetic. It is a 4 BR 2 BA house built in 1972. The HVAC, Water heater are new. The parents of the seller clearly took excellent care of the property, however, there has been a lot of drug traffic in the past few months. So that is the beginning of my story, any constructive criticism and/or suggestions on the next step would be greatly appreciated. Thank you all in advance.
Ok @George Randall, I basically bought a property for $39,000 with ARV at $150K. Most rehab is cosmetic. I have studied real estate a lot but on the buy and hold side. I’m most likely going to flip this property and don’t quite know where to start. So I’m asking advice from BP.
Sorry. My tongue in cheek didn’t come through. I get the deal, was just blown away by the story!
The next thing you’ll want to do is come up with a rough time lan for what you want to do to the property. Then you’ll probably want to hire a general contractor to manage the repairs, unless you have someone local to manage it for you. Perhaps your property manager friend has connections with contractors and can help oversee the work? Main thing now is to develop your rehab plan.
Thanks George, my property manager can actually do a lot of the work. However, we disagree on what exactly needs to be done. We have found an agent who works with investors a lot and is going to weigh in this morning. A plan will follow shortly! Killer deal right? Literally fell into my lap!