I need some advice on a potential deal.
Here's the background- We own one side of a brick twin that we currently rent out at $1300/month + utilities. The owner of the other side is interested in selling and we already have a tenant lined up at the same $1300/month if we are able to purchase the property.
The numbers- He is asking $110,000 and the property needs about $25,000 in rehab. ARV is $135,000. We had some preliminary discussions awhile back and I walked through with my contractor to put the rehab estimate together. He declined my offer of $75,000 at that time.
The owner knows he's not going to get $110,000 for the property in the current condition. I think he would agree to $85,000-$90,000. Even at the higher purchase price, the property will cash flow really well as taxes and insurance costs are fairly low. The issue is that most of my available funds are tied up in another deal that we will be closing in early May.
I have not used a hard money lender before, but my thoughts are that the margins may be a little too slim. Am I on track with that thought? I may be able to convince the owner to finance a portion of the deal, but I'm not sure how to fund the rest of the purchase.
I must admit my inexperience in creative financing, but there seems like there should be a way to make this work. I appreciate any thoughts or suggestions from the BP community!
Any suggestions on how to creatively structure this deal?
Why not just wait until your funds are freed up in early May - that's only 3 weeks away? Or if you're really looking to put it under contract now, do so but with a 60 day close and a financing contingency? Seems like moving ahead with standard financing for a buy and hold would be much easier than HML or creative financing.
@Tom S. , thanks for the response. Sorry, I re-read my post and I wasn't very clear in my explanation. Our funds are tied up in another purchase that we are closing in early May.
We figured the deal I outlined below above was dead as the seller indicated that he was going to try to make some of the repairs before trying to sell the property. We then moved on to another deal. I guess the timing is never ideal.
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