Tough deal breakdowns in San Luis Obispo California
Not at day 1... but I'm still soooooo inexperienced. I feel like I could be leaving lots of money/opportunities on the table when deals don't fall into the cookie cutter mold(purchase @ 70% ARV minus repair costs). My mentor will not look at anything that does not fall into this formula. He is laser focused on flipping with that formula and does not want to branch out to other parts of REI at the moment. I don't blame him, actually I admire his focus and commitment. I just feel like the more creative I can become, the better chance I will have at creating more opportunities. And my end goal is not to create a business that focuses on flipping homes for the MLS. That being said I am open to ANY kind of creative solution that can make a deal work for both parties.
Here is an example of one deal that we would usually throw out
Property Info
• SF
• 3/2
• House is 1,400+ square feet
• Lot is 6,250 Square Feet
• Large Garage
The Money
• ARV ~ $570k
• $50k in repairs
• Seller wanted $430k, negotiated to $379k (she needs around $50k minimum for her exit to work)
• Seller owes $329k
• Her monthly payments for house/insurance/taxes = $2,400 (Interest rate could be lowered)
• Seller is open to any creative solutions
My possible solutions ( please critique )
1. I think the property could cash flow as a rental to the right investor if they turned the large garage into a Studio apartment. Studios seem to be in high demand here because of the VERY HIGH living cost(beach town in CA). That being said the investor would have to be good with permits I'm guessing. Garage already has gas/electric/water.
2. Seller is very open to Sub-To(may be the wrong term) where I partner with the seller and pay the repair cost up to minimum MLS standards(probably less than 20k) or full remodel(full remodel seems like a big investment to risk with someone you hardly know). After the repairs we would then list on the MLS. My qualms with this is I am still not an experienced investor and I feel like this type of deal could need a certain finesse that I haven't yet developed. Although I guess there is no time to learn like the present. The upside could be that I'm still new enough to not be above some sweat equity and I've spent most of my adult life in construction. I'm a State certified electrician. My friends are plumbers, carpenters, and masons. I'm sure we could work something out.
This is just one example. But I figured I would post here to see what kind of feedback this receives.
If you made it this far, thanks for reading!