Potential Deal need HELP !!!!!!!!!!!!!!!

10 Replies

Hey BP family.... I have a potential deal that I got through a realtor. Its for 4 houses all on the same street, the owner got into some financial trouble so he's motivated. I want to try and wholesale them however I haven't done my first deal yet. i'm setting up a time to go view the properties but I'm not confident in estimating the repair costs. I reached out to a local investor to potentially team up and go view the properties with me and walk me through the deal if it goes through, however i don't have them under contract and there also on the MLS, but for more than double the price I'm going to get them for. Not sure if I should trust them to come with me or try and figure it out on my own. Any suggestions ????

I would suggest seeing if you can pay a contractor a small fee to come out and give you an accurate bid. 

You don't know if the price you're going to get them for is a good price until you accurately know the repair costs. Also, make sure you have super accurate ARVs for the properties, again utilize a realtor if you need help. 

I know it's exciting to find a first deal but the numbers have to work for it to actually be a deal. 

A good agent won't fall for the assignment game. They would ask for POF, a reasonable inspection period, etc.

@Michael Hines

You have already offered to team up with the local investor so follow up with them. If they're not interested, then move on to the next investor. 

Since these are on the MLS, and assuming they don't have any offers yet. It's probably overpriced and sitting.

Best case, you wholesale these successful with help from others. Worse case if it falls apart, you learn something in the process. 

Is it possible to that a investor can go behind my back and put a offer on the property without me knowing ? I just have heard stories about these types of things @Chris T.

@Michael Hines

Absolutely! However, you are just starting now so you can take the time to filter out who's legit and not. 

And when do you find the ones with integrity, they are the ones you want to work with and build a relationship with.

Keep in mind as well, these were brought to you by a realtor, and they're listed on the MLS. So there may be other groups working on them already.

Ok guys so i went to go see the houses and the investor was unable to accompany me so i had to go alone, here is the info.

House 1 :  2bed 1ba , 448 square feet 

ARV 150k

Repairs

 Wasn't able to get into this one the realtor said they changed the lock box. On the outside it looks like it needs new siding because it has stains and dents on it. It has a wooden stairwell that needs to be changed. I looked through the window and the kitchen looked ok it was plain white but I think it would need to be changed as well as the floors. I couldn't see the 2 rooms, It also has a wooden stairwell & deck that needs to be replaced.

My repair estimate = 25k

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House 2 : 2bed 1ba, 956 sq.ft

ARV 180k

Repairs - New bathroom, kitchen and floors throughout, roof isn't bad but it looks like it needs to be changed.

My repair estimate = 30k

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House 3 : 1bed 1ba, 504 sq ft

ARV 150K

Repairs : new kitchen, bath, floors throughout. Roof is in decent shape

My repair estimate = 20k

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House 4 : 2 bed 1ba, 1058 sq ft

ARV : 200k

Repairs : Roof decent, a few of the shingles were coming off in the middle I don't know if thats a easy fix or not, new floors throughout, bath and kitchen

My repair estimate = 40k

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The houses were not in terrible condition they just all seem to be outdated, they were built between 1935 and 1950. 2 out of the 4 houses are currently being rented out. The 1/1 is being rented for $900/mo and the 2/1 is being rented for $1100/mo. The realtor said that the 2/1's would sell for between $229-240k and the 1/1 would sell for around 160k. 

I did a little more research online and didn't see any estimates that high so I lowered the ARV for each property based on comps I found online and that he sent me. There weren't many comps in the area, I don't know if thats a good or bad thing. For my estimates I just multiplied the $25 x the number of square ft and added 5-20k more for each property to be modest because everyone always says the repairs end up costing more than you anticipate. The realtor said builders grade would to fix up the properties based on the type of area it is. These houses are the worst looking houses on the street which is a good thing.

So the back story is one guy owns all 4 properties but got into some financial trouble. He got a new ceptic system in but couldn't pay for it. The receiver put a lien on the property and he has to bring a offer to the judge and if it gets approved then i will be able to purchase the homes. The receiver told my realtor he wants 240k for all the houses so that he can recoup his money for his work plus any fees he has to pay. If i could get these houses for that price it looks like there would be a lot of equity for investors. My goal is to wholesale through a double closing but I'm not sure if i could make it work. 

The realtor wants to meet with me today to structure the offer to give to the receiver to bring to the judge. Should I move forward with the deal ? if so what contingencies should I put in the offer to make sure I'm protected ? Would having tenants in 2 of the homes pose any problems ? What are your thoughts ?

Are these freestanding homes? I can't picture a 450-500 SF home, not to mention one selling for that high if a price. Sounds like the deal could work, but I would be checking the market in such small houses.

yeah there located in a good neighborhood.

Originally posted by @Michael Hines :

Is it possible to that a investor can go behind my back and put a offer on the property without me knowing ? I just have heard stories about these types of things @Chris T.

It is very possible. I had a similar situation happen to me by an actual Agent. I won't call him by the "R" word because he might not have that title very much longer. I was looking for my first good deal and being in the REO preservation side for almost 7 years, I have a pretty good idea where some of the good ones are. Not sure I have to disclose this or not but, the properties were not any of the ones I had done work on.

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