Shout out to @Brian Gibbons Gibbons he just took 30 minutes out of his day to call me and totally blow my mind with a strategy called a joint venture. Talk about awesome! I've never really heard of it before today. So I wanted to share both this technique and how awesome Brian is.
Here is what it looks like with a possible seller I have lined up.
Current Value $790,000-$800,000
Owner owes $461,000
Seller agrees to a Joint Venture and listing agreement (I'm an agent) to get her house in fantastic condition for a top price sale on the MLS
I will come in and fix the property for lets say $30,000 from private money
Put a $30,000 lien + fee (matching private money cost) on the house to be paid at closing.
How I would make money..
$10,000 Joint Venture fee
Plus listing commission upon sale.
Heres how it looks
900,000-30,000-10,000-72000(closing costs estimated at 8%)=$788,000-461000 owed=$327,000net+waiting 1 month-2months.
if sold as is sellers net would look like this.
790,000-63,200(closing costs estimated at 8%)=$726,800-461,000 owed= $265,800net+waiting 6 possibly more months to sell.
Which would you choose as a seller?
Thanks again Brian, fantastic stuff.
It appears your asking them
To spend $40k (reno+fee) for them to end up profiting about $20k if all goes as planned. This could work well for those with the equity or those who's holding cost are simply too high for the projected 6mo to sell as is. If it's a hot market, I would do it as a seller, but if not, it sounds like it turns into a wash at about the 5 month mark for resale. Either way, a great concept to offer clients!! Good luck!
Disclosure: Yes I am Brian Gibbons, 1 on 1 REI Coach at REISkills.com
The JV with the home seller works well with people that know they can sell fast for a price.
If you cant price it and list the house right, dont do the JV.
MINOR REHABS ONLY.
Like a dated old bathroom or kitchen, paint, carpet.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!