King Of Prussia, PA · Member since 2017 · 23 posts · 2 votes
HI BP Community
I need help on structuring this deal! I'll try my best to keep this brief.
Im trying to buy a property to flip. I have enough to rehab it but not enough to buy it. The seller has done some investing and was using the house as a rental so I don't think they need the money immediately. I would like to suggest some type of seller financing but I am not sure which strategy to use. Does anyone have any suggestions on how I should structure this? Subject to, wraparound? I want to make sure I protect myself and the seller throughout the process. If anyone knows a good resource where I can research this please let me know.
Here is the deal specifics if your interested.
I sent out hand written yellow letters a got a call... it actually works people!
ARV:210-220
Rehab costs: 50k
Seller said he is looking for 150k. Obviously there is some negotiating that needs to happen here. Im thinking of offering 115 and let him work me up to 120-125.
Investor · Novato, CA · Member since 2015 · 432 posts · 321 votes
7y
Last 2 deals were a twist on this. Seller and flipper became partners. Seller contributes property, buyer/flipper contributes work and rehab costs. Revenue share is negotiable. Flipper gets TIC interest for whatever percentage. Revenue share above benchmarks for each.
Example:
Property negotiated purchase price = $130,000. Included $20k "guaranteed profit" as basis was $110k
Flipper contribution T&M = $60,000.
Seller deeds 1/3 interest to flipper.
Property sold at $220k net of closing costs and realtor commission.
$30k above the combined $190k split 50/50. Each side got $15k.
Was a skinny deal. Property values softened in Crown Point IN. Took 6 months end to end.
Investor · Novato, CA · Member since 2015 · 432 posts · 321 votes
7y
Last 2 deals were a twist on this. Seller and flipper became partners. Seller contributes property, buyer/flipper contributes work and rehab costs. Revenue share is negotiable. Flipper gets TIC interest for whatever percentage. Revenue share above benchmarks for each.
Example:
Property negotiated purchase price = $130,000. Included $20k "guaranteed profit" as basis was $110k
Flipper contribution T&M = $60,000.
Seller deeds 1/3 interest to flipper.
Property sold at $220k net of closing costs and realtor commission.
$30k above the combined $190k split 50/50. Each side got $15k.
Was a skinny deal. Property values softened in Crown Point IN. Took 6 months end to end.
King Of Prussia, PA · Member since 2017 · 23 posts · 2 votes
7y
Thank you @Steve Hodgdon, I appreciate your example! Just to make sure I got this right...
So the agreed price was 110 for purchase then you added 20k as an extra payment for the seller to partner with you? Then you split the profit 50/50 as well, right?
What type of legal help did you need in this deal, and what was the price to set it up?
King Of Prussia, PA · Member since 2017 · 23 posts · 2 votes
7y
UPDATE!
The seller agreed to do seller financing, we are going to agree on a price so that I can make about 25-30k on the deal and then anything over he will get up to 5k after that we will split it.
Im going to spend the rest of the day researching deals like this. Does anyone know of any books or articles that go into detail on this subject?
Investor · Novato, CA · Member since 2015 · 432 posts · 321 votes
7y
Go look at www.garyjohnston.com . He has a library of books from the old timers. I'm particular to Pete Fortunato and Mike Cantu as they're in the biz, not authors. should be some free stuff on papersourceonline.com too. I buy/sell seller finance paper . Congrats! Go get em!
Investor · Novato, CA · Member since 2015 · 432 posts · 321 votes
7y
Go look at www.garyjohnston.com . He has a library of books from the old timers. I'm particular to Pete Fortunato and Mike Cantu as they're in the biz, not authors. should be some free stuff on papersourceonline.com too. I buy/sell seller finance paper . Congrats! Go get em!