Wholesaler · Huntington Beach, CA · Member since 2013 · 41 posts · 10 votes
Hello everyone!
I had a seller respond to an ad that needs to sell and needs to sell quick due to being out of a job and I need feedback on the best strategy to exit the property.
She owes the following on the property:
HOA $3,835
Taxes $5,000
Mortgage $69,700
This is a 1 bedroom condo with a tenant in place that has been there for 3 years and the seller just raised the rent to $695 and the tenant wants to stay on a month to month lease. This is in the Palm Springs area and it is a desirable place to live so even if she left, I know tenants are not hard to come by.
All of my deals have been "low hanging fruit" wholesale deals with equity cause this is who I have been direct marketing to but now running ads this is my first lead that is not so clean.
Is a seller financing situation the best case with a down payment of the balances owed being worked out? Is that even attractive for an investor for me to wholesale?
This property is a bad Buy and Hold AND a bad Flip.
Bad Buy and Hold: Your taxes and HOA fee combined are HIGHER than the rent. Plus you have a small pile of other expenses to pay.
Bad Flip: Assuming your ARV is 80k. 70% of ARV is 56k. Plus there will be repairs.
Result: Run away, unless you are a Realtor, then go get it under contract with your brokerage and get it sold for her. Do not put any of your money in to this property!!
What is the market value of the property as-is? What about after repairs? And how much cash is needed for repairs? I think these answers will help us help you!
Its in really good shape according to her and the landlord has made upgrades on the floors and deck for the property.
There is 1 comp from 8/4 for $80k and that property looks similar to what she described as hers to be. I just received the lead today and have not seen the property yet to confirm it.
This property is a bad Buy and Hold AND a bad Flip.
Bad Buy and Hold: Your taxes and HOA fee combined are HIGHER than the rent. Plus you have a small pile of other expenses to pay.
Bad Flip: Assuming your ARV is 80k. 70% of ARV is 56k. Plus there will be repairs.
Result: Run away, unless you are a Realtor, then go get it under contract with your brokerage and get it sold for her. Do not put any of your money in to this property!!
100% agree with the prior posters to run away if those HOA and taxes are the annual figures. If those are the annual figures, wish the current owner the best of luck, but no one can profitably help.
But it seems more likely from the language that @Keith Agnello used in the first post (and some common financial sense) that those are the current balance figures (meaning the owner is delinquent), and that represents something more than the annual figures plus some late fees, interest, etc.
Jim Sokoloff is correct the balances stated above were delinquent taxes and HOA fees. The HOA is threatening foreclosure according to her next month so she is starting to panic.
I knew right off the bat that this was not going to be a deal for a flip but my lack of knowledge of buy and holds is where I'm still learning.
Even if we were to agree to pay her balances on the taxes and HOA fees and take over mortgage payments, without equity there is no room for profit for anyone.
Jim Sokoloff is correct the balances stated above were delinquent taxes and HOA fees. The HOA is threatening foreclosure according to her next month so she is starting to panic.
I knew right off the bat that this was not going to be a deal for a flip but my lack of knowledge of buy and holds is where I'm still learning.
Even if we were to agree to pay her balances on the taxes and HOA fees and take over mortgage payments, without equity there is no room for profit for anyone.
@Chris Kennedy if she has let's say 2 weeks to pay this balance before the foreclosure process starts, would that interfere with the sale of the property at all?
Thanks!!
Hey guys,
An update and I need some insight.
The owner said the note is held by a private lender who is willing to negotiate a fair offer if it is a quick cash transaction.
What is my ideal play here?
Thanks in advance
I am lost let me see if I follow this right. The seller contacted you because she needs to sell because of overdue HOA and taxes that equal $8,835. She owes $69,700 to a private lender. Which should be first on the deed? Now I am guessing that the private lender has money to pay the $8,835 in overdue HOA and taxes. Not all is lost yet. Grand total of $78,535. First 1 bedroom is a rough sell, but can be done. Lease option the property if the private lender is willing to deal. Market the property as a rent to own by owner. Put a lease option fee in there of 15% this is how you will get paid, 10% to private lender on the overdue HOA and taxes. So he gets his part of his money back on the overdue HOA and taxes, 5% to you for creating the deal and making everyone happy. Private lender can then raise the rent to let's say an even $800. You can make this a 3/year option with a balloon payment to the private lender, or sandwich the deal. Take a smaller cut of the 15%. Get paid $100 a month for 3 years, and then get paid at the end.I am no pro by any means, but I feel when someone calls, we as investors should help. Create a solution to help the client. If all means of creative deal solutions cannot be done, point the seller in the right direction.