Hello BP family. I have a 2 part situation/question. So instead of making 2 separate posts I'll just post them here.
I'm finally ready to overcome my 'ANALYSIS PARALYSIS' and make some offers but I'm not sure how to proceed.
My 1st situation/question is:
There's a duplex in my area listed for sale by the owner priced at $18,500. Unit 1 is a 4/1 and unit 2 is a 3/1. While I do have the cash - about $50k to outright purchase the property I don't want to deplete my bank account in the process because there will be some fix up rehab costs to consider. I just recently found out while researching that banks tend not to make mortgage loans for less than $50k. I would rather be able to take out a loan to purchase the property and rehab it while not having all my money tied up in the purchase and rehab. My plan is to buy and hold for the potential rental income - so no quick flip turn around.
Does anyone have a suggestion on how they might proceed with this? How would you make this deal happen being that most banks won't give a mortgage for such a low amount?
My 2nd situation/question is:
I recently spoke to a homeowner who wants to sell their single family property with a tenant in it. The property is one street over from my street so I'm familiar with the property. The homeowner lives out of state and I was told by a reliable source that the tenant is not paying the rent. So I know the owner wants to sell and be done with the headache of trying to manage a rental property from long distance. The property was listed for sale a couple of years ago but for some reason it didn't sale. I also know that the kitchen was upgraded along with hardwood floors throughout in the past couple of years. I believe the owner owns the property outright with no existing mortgage. The homeowner is asking $45k.
So my question to the BP family is how would you proceed with this deal? I'm thinking along the lines of asking the homeowner if she'll being willing to consider 'seller financing'? And if so, What questions should I ask? And at what terms? Or if she won't go for seller financing, what should my next step be?
Thanks in advance to each and everyone who chimes in with their input, advice and suggestions.
I’m sure you’ll get a lot of smart answers and I’m eager to hear opinions. What I can tell you based on our first investment, is that we purchased a foreclosure with a tenant (owner, actually) in there right out of the gate. And, he was angry too! There are eviction specialists that can assist you with the proper steps. Research this in your area or among realtor friends. Usually, a letter is delivered to the current tenant and they have 30 days to leave. If they don’t leave, another letter is given and paperwork is filed with the local municipality for a court date. All of this to say, factor in addt’l time and money to scenario #2 in case you have to evict. It sounds scarier than it is so don’t let that stop you from a good deal. Good luck!
@Derrick L. In response to your 1st situation, I would start calling around to different banks. It will be more difficult to get a lower value loan, and your fees will likely be higher, but there are lenders out there who will do it. I's start with small local banks and call as many as you can find. For your second situation, I'll echo what @Natalie H. said. Just make sure you price in the cost of eviction (which seems likely) when you make an offer. I don't have much experience with seller financing myself, so I won't speak to that.
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