Ok here it is...
I look for properties that look vacant , then I look them up. But let's say the owner bought the house @ $200,000 in '06 but now the house is valued at $85,000. Would that be a house that they would want to get rid of or that I should even look at for wholesaling? I ask because I know the value is much less than the purchase price but would that be worth for the owner to want to get out?
How about also looking up the mortgage amount. Did they borrow 180?
@Betsy Chacon there's other variables to take into consideration. Do they own the house free & clear or are they still paying a monthly mortgage? Also have a realistic expectation that if the owner paid $200k for the subject property and now its appraised value is only $85k then the chances of them allowing you to get it under contract for an amount where you can make a little money is unlikely.
You started by saying the houses look vacant. If the houses are, indeed, vacant, then they are currently bringing no value to anyone. Therefore, regardless of what the records say, purchase price and all, try to talk to the owners to see what the deal is.
If owning a vacant house is worth it for the bulk of them, that is, they ARE creating some value to the owners, then stop calling based on the mortgage numbers. But if the houses are not creating some real value then negotiate with them.
You may have to become more creative with underwater houses but if the owner has no better options, you may be able to find something that works for you.
One of the recent BP podcasts had a story about an investor making a deal that worked when the theoretical numbers didn't.
Heres some rules of thumb regarding low equity or no equity or upside down.
Low equity under 10% is generally subject to or lease option assignment Deal. Under 10% there's little room for sales commission, closing costs or sellers concessions.
And zero to -10% equity, it could be a long-term lease option or lease purchase. But the term we need to be 5 to 7 years.
And they over -10% underwater, especially for more expensive houses like over 300,000, that's $30k, I would be very cautious.
Just because you don't think you would ever sell a property you paid $200K for at a deep discount, don't project those thoughts onto other people. I would never jump off a building with a parachute, but lots and lots of people find it to be quite the thrilling sport.
I've purchased lots of houses where the seller walked away from $100K or more. It isn't you that is causing them to lose it - it's already gone and holding longer is only going to cause them to keep losing more money. Get them to recognize that fact and you're one step closer to closing them.
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