Good deal or bad deal?!?

Question

I got a call from a absentee direct mail campaign. Homeowner is interested in selling. Renovation was started but still needs to be finished. Owner can straight out and said comps were 400K and he would not entertain 200K. The place has potential to be converted from SFH to duplex. The mortgage info states 155k and assessed at 28K. I asked owner was there still a mortgage but question sort of ignored. Homeowners seems pretty open to ideas I want to present seller financing and I fund the rehab/mortgage renovation is done and property sold. I think I heard a BiggerPockets podcast like this; but I can’t find it. How can I negotiate the owner carrying loan while I renovated and sell to end buyer

Anthony Dadlani · Answer

@Erica Hatfield

Yes I would go off the comps. It’s always advisable to bring in a money partner if the deal is above your financial capability. Hence networking is important. This site and others like it are ideal places to meet like minded people and investors.

Best of luck in all your endeavors.

Anthony Dadlani · Answer

@Erica Hatfield Typically seller financing long term is an option when there is no mortgage.

Suggestion #1 offer a JV to the seller. You invest the remodel funds and then share profit when the property sells. We have had success doing that often with our PM partners.

Suggestion#2 Bring in another investor to buy the property cash outright

Best of luck in all your endeavors.

Erica Hatfield · Answer

@Anthony Dadlani Thank you for those options! Homeowners gave me a number that would be considered great offer. Next, for the negotiation. The assessor information on the property is not accurate; sqft off and bedrooms/bathroom off. I am still working on due diligence; should I just disregard the assessor information and make offer based on comps. The analysis of the property is stressing me out! I think bringing in another investor with more experience might be a great option. This property has so much potential!

Jim Goebel · Answer

@Erica Hatfield

Seems a bit like a mine-field to me - I don't have experience with this.  If you're not able to purchase outright, then you'd still have a bank in first position (it sounds like).  Which, I don't know what iron-clad contract would help protect you to get into actually doing work.  Maybe others can weigh in with a possible path here but I don't see it personally.

Good deal or bad deal?!?

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