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Silver A.
  • Real Estate Investor
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Help with condo exchange deal and compensation

Silver A.
  • Real Estate Investor
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Posted Mar 21 2011, 19:02

Hi,

I would appreciate your thought on a condo exchange deal, leaving aside the HOA fees and such.

Many people are trying to sell their larger condominiums here because they don't need the space for some reason and/or can't afford the upkeep expenses.

The condo prices on the local market are very stable and can't be negotiated much, there is a lot of demand for smaller units. (aka 85% ARV deals are gone in hours after being listed)
There are too many flippers on the market and lowballing for 70%ARV, then flipping hasn't yielded great results lately.

My idea is to buy a smaller condo at 85% ARV which needs very little, if any repairs. Lets say a 2br/1ba for 450k (prices on the market from 480k), and then find someone who needs to downgrade from 4/1 or 3/1 (prices from 670k). I expect to pay about 50k-75k in compensation for the seller, and then cash out, selling 3/1 later.

The seller will save about 40% on monthly HOA fees anyway moving into a smaller condo, so it's a win right there for them.

Now how would I advertise that in a newspaper? Should I list the amount of compensation in the ad or not?

Have any of you done exchange deals like this (profitably)?

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