Can I make this a deal?

Question

I have a motivated seller but this would be my first wholesale deal and I'm not positive I can make this deal work.

It is a 3 Bed / 2.5 Bath Townhouse

ARV $105,000 
Estimated Repairs $2,000 (clean-up from tenant, paint, carpet)
Remaining Mortgage Balance on the house $85,000

The seller was renting it out for $990 / month  
Looking to sell ASAP but obviously won't take less than $85K

Is there anyway I can work these numbers for it to be a good deal?

He is open to seller financing, but I'm not sure how to set it up to make it work...

Thanks for any advice!

Amir Levi · Answer

Jon Holdman

I thought the rent was 990, but even 950 rent for 92000 price is a good deal in my books.

LL will end up with a cap of over 8%, after 30% exp ratio for tax/ins/rep/maint.

8% cap is not bad at all.

what is the int rate on the 85k loan balance.  If it is at 3.5% it make for even a sweeter deal.

Why should one let go of a deal like that?

Buy and hold is what buyer should do here, and wait for inflation to take care of you.  In the meantime, enjoy the positive cash flow.

Amir

Allison Chronister · Answer

Thanks, I didn't think it would be but I know there are ways to structure a deal with little to no equity.

I guess its time to give this one the Nix and say NEXT!

Jon Holdman · Answer

IMHO, there's no deal here.  $85K for the seller's price (and he'll want more when he discovers closing costs), 2K to fix (seems low, even with your list, plus you say its been previously rented) and then your fee on top of that.  So, net to your buyer maybe $92K.  Vs. $105K you're at 90%.  Not a deal at all for a rehabber.  $92K vs. $950 is too high for my taste.  Have any buyer's on your list that might work for?

Bill Gulley · Answer

It's a little on the thin side for profits to flip as well as rents, but it could work, but what are your plans for it? Are you buying with cash, financing it or are you trying to do something else? :)