FIX AND FLIP WITHOUT BUYING
Hi,
Does anyone know about the possibility of rehabing a house without owning it?
My point is finding a homeowner that is trying to sell his house with difficulty because his house needs repairs and he doesnt have the time nor the money to fix it! Instead of buying his house, fix it and sell it which generates a lot of closing and holding cost, what if i could agree with him to rehab his house, take care of selling it and make a profit without actually owning it!!
Is it doable? What are the risk (if he doesn t want to sell anymore for exemple) and how can i protect myself ? (Take a mortgage on his house?)
Thanks,
Manuel.
Ps: sorry for my english: i am french but live in Mexico (RIVIERA MAYA) and a big fan of bigger pocket...
@Manuel Reglatit's a great point/question, and I have tried it. But the difficulty for me was being able to negotiate terms with the seller.
Many times the terms will need to overcome these obstacles: The seller wants to sell fast; s(he) will have hard time trusting you (or vice versa); then you will also need to put valuations (very subjective) on the house if it were to sell today and some split of the profits - all this without (likely) knowing the seller well.
I think it's worth a try (and you will definitely need to protect yourself somehow - possibly mechanic's lien for agreed upon value of work), but in my experience I was not successful.
I think the biggest issue you will face is a seller that doesn't want to sell or move after the renovation. If the seller decides to keep possession of the house, your options for recouping your investment in a timely fashion will be severely limited. Additionally, most sellers do not want to live in a home which is actively being rehabbed, so unless it is vacant to start with, I doubt this strategy will work.
-Christopher
thank you very much for your quick answer. What seems to be a cheaper way might turn out to be more expensive as the owner can "change his mind" ...
I have done this with a few properties but they were not living in the property. I did a lease option contract for 6 months and gave him a non-refundable deposit and a monthly payment which applied to the purchase of the agreed upon purchase price. He had nothing to lose and would get a fixed up property if I did not execute the contract. To protect myself I filed a memorandum of agreement and filed it at the courthouse so he could not sell the property out from under me in the meantime. I also stipulated in the contract that I was the purchaser and or assigns so I could market the property and sold the property with a double closing using transactional funding. I agree that if an owner is in the property the risk would be much higher. I also insisted on being able to monitor his mortgage payment to be sure that he was paying it and also was able to keep track of the balance.
Very informative Charlie! Thank you very much! That s gonna help me a lot!
Best regard,
Manuel