Investor · Birmingham, AL · Member since 2015 · 254 posts · 136 votes
Hey guys!
I have come across what may be a pretty good deal, and I need some help.
My distant great aunt owns 2 acres of land in a somewhat suburbanish area. I would classify it as a B neighborhood. The property has 2 houses on it. One is a nice manufactured home in need of minor repairs. The other house is a single family home and it was my Great Great Grandmothers house. It was built in 1940 and needs a complete renovation. As of now, the property has been abandoned for several years but has been kept up with from a 3rd party property manager.
So I gave my great aunt a call and she told me she had been wanting to sell it for several months but never got around to doing it. She said she didn't want the headache. So she told me to make her an offer on the property. So, I did what every great investor would do. I told her I would call her back. :D
I only have a few thousand to work with right now (hence the title) so I'm short on cash and I need some help on figuring out what might be the best way to creatively finance and renovate this property.
So here is my question: If you were in this situation, what would you do? ("refi" takeover, seller finance etc.)
The first thing I would do is ask your great Aunt what she wants/needs. It may be less than you think. It doesn't seem like she is in serious need of the money she would get from a sale. She may be open to financing the deal herself. In that case, she would be trading a property she doesn't want for an income stream from someone she trusts. (I assume she trusts you.)
@Nicholas Armstrong Yes, more details needed. It is livable now and would it qualify for any type of financing? If you'll owner occupy it, there are some programs as low as 3.5% down. If she'll finance it, can you live it in now and slowly use your own money over time to rehab it?
If it's not livable now, you can always reach out to small local banks and try to secure purchase + rehab financing (you didn't mention your credit, only cash situation).
Of course, be sure to due your due diligence to make sure it's a deal, and that you're not just being sucked into a money pit.
Since no one else has mentioned it.. The title is a reference to Macklemore's song.
Wish you all the best in your REI ventures!
And good luck with your Aunt's deal. Oh, and I do agree with Jeff. Asking her will give you a great starting point on figuring out how to put the deal together. Keep us posted on what you do. Thanks!
Get an estimate on what the ARV would be for each property and offer a low-ball figure based off of how much $ it would take you to fix up the property.
@Jeff Rabinowitz I spoke with her about it again yesterday evening. She really just wants to wipe her hands of the place. She moved to the beach, she just wants me to make her an offer. Im going inside both houses today.
@Tom S. One house is very livable. It would add about 15 minutes to my daily commute to work. The master bathroom will need to be rehabbed. The tenant who lived in it before tried to put tile on the bathroom wall in the shower. The tile was to heavy for the type of wall and it pulled the wall down. He left shortly after without notifying my aunt. As far as the other home, I wouldn't want to live in it as of now. It has been empty for over 10 years and it will need a complete renovation. What if I asked her about seller "refi" takeover? I could purchase the property with no or little money down, and possibly work out a deal with an RE attorney where she can give me a % back for rehabbing? Maybe my aunt could piggyback the loan? Im just trying to think about my options.
@Ron Woods Great idea. Isn't there an ARV tool on BP?
*UPDATE*
Since I've written this, I've talked to my great aunts daughter. She will be the one handling the transaction. She is a Realtor of all things lol. Also, she told me there is a lien on the property! Is that going to change my situation? I appreciate all of you all's help so far!