20k Easy Money if I do this right - HELP!
I am new to this board, so thanks in advance for the help I know that you all will give me! I am excited to get started in REI and I need help analyzing my first deal that I have found.
So here are the bottom line factors:
Buy at $215k-$225k
Sell at $245k to City in 60-90 days
The Sellers want a month to get packed up and out of there.
Costs:
Mortgage
Insurance
Moving Company?
Car Fix?
My question is, how should I proceed? Should I...
- Put the property under contract and then talk with the city
- Have her put it under contract and then buy her position in the contract
- Have the city sign a contract with my guarenteeing that price and closing timeframe before I sign a purchase agreement
Here is the story:
There was an abandon house that I noticed one moring on my way into work. It is crazy, because I have driven by the house literally 100s of times in the last couple years and I have never noticed it. Anyway, I looked up the tax info online and discovered that the people that owned it did not live there anymore so I decided to do a little more investigating to learn about their situation.
I drove over to the house one evening with my two little ones (2 year and 5 months) and put them in the stroller so that I could walk through the neighborhood and get a better look at the house.
After I looked at the house (which looked a little bit beat up but not too bad) I decided to knock on the door of their neighbor to see if they knew anything about these people's situation.
That was when things got interesting...
I'll try to not go into too much detail, but basically I knocked on the door and a guy said "come in." I poked my head in and there was this guy with tubes running into his nose just laying on the couch. He didn't look good. I apologized for barging in on him, but then I asked him if he knew anything about the house next door. He said that he didn't but that I could call his sister and she would know a lot more. He gave me her number and I gave her a call.
Through my conversation with his sister I learned everything about the abandon home (how much was owned, what the owner wanted for price, how long it had been abandon, everything). Then she said, "we are trying to sell my brother's house too!" And I was like, "really?" So we started talking about her brother's house (the house that I stuck my head into).
At first it didn't look like it would be that great of deal but I kept a good rapport with Linda (the guy's brother) and I come to find out that the City that this home is located in is very intersted in buying their home and they are going to come over in about a week. So, I say to her, "I just want to wait and see what the city will offer you, then let's talk."
She called me today and said that the city offered her $245,000 but they were going to take 60-90 days to close and they didn't want to wait that long because of her brother's desire to move down to be with his children before he dies, and they don't know how long he will last.
She said that she talked it over with her brother and they are willing to sell the property to me at $225,000. I got a bunch of the needs that they have right now (need to fix up a broken down car, desire for a moving company to move them, etc.) so I think if I can help them in those areas I might be able to get the price 5-10k lower.
Also, should I set up an LLC or an S-Corp before I do this deal or should I just do it under my name for the time being? I want to get all the tax advantages and liability coverages I can at this point but I don't want to hold up the sale.
I also told her this afternoon that I would get back to her with a decision or to negotiate the deal by this Saturday (June 9th). Yeah, so I really need to figure this out quickly.
Thank you so much for your help!!!