My First Deal, Please Review

5 Replies

First I have to say, I am trying to put this deal together to raise money for a non-profit charity called Believe Big. They are looking to begin the 1st Clinical Trial on Mistletoe as a treatment for cancer and are 89% of the way to their funding goal of $300K. This is a historic event, google John Hopkins Medical and Believe Big. This trial could change the way we treat cancer in the U.S.

I am a volunteer for Believe Big, helping support Cancer Patients who are making the transition from a SAD(standard american diet) to more of a whole foods, plant based diet. With that being said, I have been looking to do a fundraiser, but that requires a great deal of my time and with 3 kids, my time is very limited right now(Room Parent and volunteer at both schools). I'm a Christian so I've been praying for other doors to open and low and behold, call it coincidence if you are not spiritual.... I get a phone call from a lady I spoke with two years ago about doing a lease option on her home. She wasn't interested at the time I called her and the deal never came together. She called yesterday and said she needs to unload the property. I asked her what she owed...all mortgages, if more than one...She owes $260K, but wants what she put into it, $330K. Said the same house down the street is listed(not sold) for $325K and her place has more upgrades. I sent a few more questions to find out just how motivated she is...Are you moving? No liens? How quickly do you need to move the property? Are you current on all your payments? If you can't sell or rent your place, what are your options?

I know I have very limited information at this point, but does it seem like the making of a good deal? I would love any assistance I can get with pursuing this lead...I can pull comps. My husband is an Attorney but has a real estate license so I have access to the MLS.

Thank You!

Tracy Coats

What would you do with the house? I assume it would not make a good rental at that price. Does it need repairs? If (big if) it could sell for $325k as-is, it might make sense to buy it for what she owes ($260k). Remember you will lose 10-15% just in buying and selling costs.

If it could sell for $325k as-is, why is she not listing it herself? What's the motivation?

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My plan was to maybe see about getting this house on terms and doing a lease option with a tenant. The fact that she is contacting me 2yrs after I first approached her tells me she might be very motivated to get rid of the property. I looked up the address and she has tried to sell her home, but didn't 'y have luck . She may want 330k, but ultimately she may have to take what she owes the bank $260k to unload the property. I've sent follow-up questions to understand her motivation for selling. Guess I need more info. To really know whether there is something here.

Tracy

@Tracy Coats most of the folks here at BP are in the "buy under market" like 10% to 20 % under market, so you can flip, right? You have a seller that has no equity or very little. It has no real value to most folks here.

These are "thin deals", no equity deals. You need a seller that really needs to sell on terms.

Terms here means generally sub2 or lease option assignment. I have written extensively on "thin deals" on my BP blog

http://www.biggerpockets.com/blogs/3-reiskills-and-brian-gibbons

You need to present to the seller 3 scenarios:

1) Selling with the agent, losing 10% to 15% of the comps value of the home, with agents commissions, closing costs, sellers concessions, negotiation decreases, vacancy costs paying PITI while selling, etc. The real net to the seller is about 90% to 85% of comps.

2) Renting the Property, dealing with an unproven tenant, risking damage, late and no rent, eviction costs, etc.

3) Then in your state you have some kind or rent to own or installment sale. You do need to understand lease options, disguised installment sales, etc.

Thin deals you can make money on the option fee and assign the deal, or buy on sub2 and lease option out.

The house better be perfect in maintenance and PITI payments better be close to market rent, and in demand as far as location and floor plan and condition.

PM me if you need help.

And keep religion seperate from business. This is a numbers game.

Trust in God but Lock your Car.