New investor from New Jersey looking for advice.

[Tom W.]

Hello everyone. I'm located in Northern NJ and find myself in a bit of a unique situation that I could use some advice on. I have always wanted to get into real estate investing, particularly flipping. I have a background in the construction industry and have watched others do it but never felt comfortable putting my family in financial jeopardy by taking the risk. I find myself in a different situation now so I'm ready to take the plunge. I could use a little advice from some of you experienced folks on how to proceed. The situation I am in now is this. I, along with 2 siblings, have inherited a 2 bedroom single family home here in NJ. My intention is to use my share of the money gained from the sale to reinvest in real estate. My siblings live out of state and I am the trustee of the property so it is up to me to deal with the sale of the home. Unfortunately, it's not selling. I originally listed it $20,000 below my realtors suggestion and had very few lookers. I dropped the price by $10,000 2 weeks ago and have only had two additional lookers and still no offers. I'm considering dropping another $10,000 this week to see if it creates any interest but don't know if I'm thinking in the right direction. I have considered turning this into a rental and holding it for a while but I would have to come up with the funds to buy out my siblings since they are not interested in being landlords. I have also considered buying out my siblings and turning this home into my first flip but since I'm having so much trouble selling now I don't really know what to figure for an ARV so I can determine if the numbers work. I also can't really try to buy it so cheap that it creates family problems. Does anyone have suggestions on how to deal with this situation?

[Tim Pagano]

Not so quick Tom. One of the better times of the year to sell here in NJ is late January and early February.  There is a robust market then.  Folks have their bonus checks and going under contract then means the kids are ready when school lets out to start in the new area.  It happens all the time.  Also buyers need to be serious about purchasing a house when wading out into the cold weather to look at a property.  

If you can afford it.  Take the house off the market clean it up and relist early next year.  Also it gives you time to get to know the market better and find a realtor who knows how to sell. 

Think creative financing.  Where would the siblings put the proceeds?  If it's a bank they could get a much better return on the money if they received the proceeds from rental income.  Conversely by letting you do the fix and flip next year  without making you cash out you could increase the value  of the property and sell at a better time of year for a higher price.   Done correctly it could be a win win for everyone involved.  Also have you asked each sibling what cash they may need immediately.  Pay them a small amount now and the balance when the rehab and sale are completed.  

 If you have questions PM me. Good Luck and don't get discouraged.