Sumter, SC · Member since 2013 · 105 posts · 10 votes
Seller has a Property that her son is in and not paying rent ( so she has to pay all the bills). She even said that she would have to go back to work to pay her bills ( she is retired).
She is asking $150,000 ( that is what she think it is worth but not sure.) I did a quick look online and it looks like it is worth about $135,000. It does not need any repairs. I have not got the Comps for it yet.
She owes only $18,000 and pays about $1000 a month in PITI.
Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
11y
The motivation on the seller part is there - I'd rate this as a warm on a scale of cold/warm/hot. You need to move her more to hot. The main hook here, based on what you've shared, is she has to go back to work to pay these bills. She may want $150K but you need to wrap this up in a bow on how you are going to ELIMINATE THE NEED for her TO GO BACK TO WORK. Is there a way to do that? What would this property rent for? Could you take it over sub-2 and rent it out? There are several people on this forum that do lease options that may be able to help.
Has she considered refinancing and taking the cash out to lower her PITI?
Investor · Longview, TX · Member since 2012 · 631 posts · 186 votes
11y
Hi @Matt Ellis what do you want to do with this property. The answer would dictate how you would negotiate your purchase price. Good Luck to You. Tom & Roni
Real Estate Investor · San Diego, CA · Member since 2014 · 26 posts · 9 votes
11y
I'm new but will still add my input. Have you talked to her about how if you purchase the property you would get her son out? You may have to go through an eviction process in you buy it. It seems like she has plenty of equity in the place. If she really wants to get out of it why not just offer her 89.5k. I mean, you're an investor. I did 70% of 135k and then took off another 5k just because there is always something that needs to be or could be fixed. It's better to offer low and negotiate high. We aren't in the business of buying deals to break even, and it's better to lose a deal that you won't make money on or you will lose money on then try to make a deal work and lose money or break even. That's just my opinion. I haven't done any deals yet, however, I wouldn't get into any deal that I wasn't absolutely sure I would come out ahead on. Also, it depends on what you intend to do. I was coming from a wholesalers perspective. But I'm also very green and at this point I'm just using common sense and 32 years of living experience.
Real Estate Investor · San Diego, CA · Member since 2014 · 26 posts · 9 votes
11y
I mean the cheaper you get it the more options you will have. Because if you get it at a huge discount I'm sure tons of investors will come out of the wood work lol.
Real Estate Investor · Sioux Falls, SD · Member since 2013 · 415 posts · 84 votes
11y
You definitely have a workable deal here. IMO all you really need to do is sell her on you're here to help her get out of this terrible situation she is in and you have a win win scenario for her.
I would ask her "what would you be willing to take if I were to offer you a cash offer today?". Don't give the 1st number let her start out and see how low she will go. Then restate how you would be helping her by keeping her from going back to the workforce..
Then let her give you a lower number.
I would definitely follow up on this and move forward with it.
Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
11y
The motivation on the seller part is there - I'd rate this as a warm on a scale of cold/warm/hot. You need to move her more to hot. The main hook here, based on what you've shared, is she has to go back to work to pay these bills. She may want $150K but you need to wrap this up in a bow on how you are going to ELIMINATE THE NEED for her TO GO BACK TO WORK. Is there a way to do that? What would this property rent for? Could you take it over sub-2 and rent it out? There are several people on this forum that do lease options that may be able to help.
Has she considered refinancing and taking the cash out to lower her PITI?
Sumter, SC · Member since 2013 · 105 posts · 10 votes
11y
Great Point @Christina R. . I will def hit those points. She stated that she didn't want to go back to work and that she was on a fixed income. What type of feal should I offer?
Hello, First you need to find out the True ARV is first. Do you have a Realtor you work with that can get you what the house is actually worth or a program that can tell you that. You say there is no repairs needed on the house at all? (Are you sure, if its for rehab are the windows, roof, furnace, water heater, AC, kitchen, bathrooms, paint and flooring good?) If your exit strategy is to wholesale to investor that will be using it as a rental and no repairs is good, but you need to know what your investors price point is for that neighborhood and minus your wholesale fee from the price you offer your seller. NOW if you exit strategy is to wholesale to an investor to rehab or keep for yourself to rehab you need to know the ARV so lets say the ARV is 135,000 x .70 =94,500 minus repairs 15,000 minus wholesale fee 10,000 =69,500 ALL CASH close quick offer to seller. (you set your wholesale fee amount, that was an example) Most important tho is what your seller is needing, listen to your seller, and try very hard to accommodate their needs, have compassion for their situation, answer all questions and remember honesty and integrity will take you a LONG WAY in this business!!! Good Luck, sounds like a good deal to me!!!
Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
11y
Can you provide at least 20K in cash? If she is concerned with going back to work, her cash flow probably isn't great - even with getting this resolved.
If even if you are low on the offer price, you may be able to get owner financing. You can point out that giving her 3 or 4%(a great rate for you), will be about twice what she could get from a CD.
Hello, First you need to find out the True ARV is first. Do you have a Realtor you work with that can get you what the house is actually worth or a program that can tell you that. You say there is no repairs needed on the house at all? (Are you sure, if its for rehab are the windows, roof, furnace, water heater, AC, kitchen, bathrooms, paint and flooring good?) If your exit strategy is to wholesale to investor that will be using it as a rental and no repairs is good, but you need to know what your investors price point is for that neighborhood and minus your wholesale fee from the price you offer your seller. NOW if you exit strategy is to wholesale to an investor to rehab or keep for yourself to rehab you need to know the ARV so lets say the ARV is 135,000 x .70 =94,500 minus repairs 15,000 minus wholesale fee 10,000 =69,500 ALL CASH close quick offer to seller. (you set your wholesale fee amount, that was an example) Most important tho is what your seller is needing, listen to your seller, and try very hard to accommodate their needs, have compassion for their situation, answer all questions and remember honesty and integrity will take you a LONG WAY in this business!!! Good Luck, sounds like a good deal to me!!!
Sondra, Great point but you forgot the $18,000 that she still owes on the home.
Real Estate Investor · San Diego, CA · Member since 2014 · 27 posts · 58 votes
11y
Pull comps in the area. Ask her why she has to go back to work. Probably her son is a drain on her income.Ask her what is her retirement income is . If you where to offer an responsible structure where her recent income is stable for her not to go back to work, then she will do it. Probably the extra 1000 is killing her. Remember these people are on a limited income. How old is she?
Investor · Beavercreek, OH · Member since 2014 · 51 posts · 31 votes
11y
@Chas Fabiano just FYI her 18K that she owes on her mortgage comes out of her 69,500 cash offer!! You don't take that off the ARV, ARV stands for after repair value!
I used the 10K wholesale fee as an Example as i said, and you can set your wholesale fee according to your deal and price point of the property you are wholesaling!! This is where the integrity comes into play and knowing my sellers, knowing my buyers come into play. I love repeat business!! I don't want to screw people over either, so if i was to wholesale this particular deal and ask for a 30k wholesale fee this seller would get only 49,500 from me. Which in turn minus the 18k mortgage she still owes, now gives her 31,500.
I listen to my sellers, i am here to help them!!! Yes, I want to make money, but i make money by repeat business and word of mouth. My wholesale fees depend on the ARV of the properties.
Hello, First you need to find out the True ARV is first. Do you have a Realtor you work with that can get you what the house is actually worth or a program that can tell you that. You say there is no repairs needed on the house at all? (Are you sure, if its for rehab are the windows, roof, furnace, water heater, AC, kitchen, bathrooms, paint and flooring good?) If your exit strategy is to wholesale to investor that will be using it as a rental and no repairs is good, but you need to know what your investors price point is for that neighborhood and minus your wholesale fee from the price you offer your seller. NOW if you exit strategy is to wholesale to an investor to rehab or keep for yourself to rehab you need to know the ARV so lets say the ARV is 135,000 x .70 =94,500 minus repairs 15,000 minus wholesale fee 10,000 =69,500 ALL CASH close quick offer to seller. (you set your wholesale fee amount, that was an example) Most important tho is what your seller is needing, listen to your seller, and try very hard to accommodate their needs, have compassion for their situation, answer all questions and remember honesty and integrity will take you a LONG WAY in this business!!! Good Luck, sounds like a good deal to me!!!
Sondra, Great point but you forgot the $18,000 that she still owes on the home.
What her $18,000 in remaining mortgage have to do with anything. That comes out of the sellers profits and have nothing to do with determining an offer.
Brandon, FL · Member since 2014 · 55 posts · 13 votes
11y
You may want to clarify some things in order to help yourself find your answers.
1) What is your exit strategy?
2) What is the real ARV?
3) What are the eviction laws in your local area?
4) Make certain there are no repairs. A son who is willing to let his fixed-income mother go to work to pay his bills is very possibly not taking good care of the property. So, you need to know the true costs of the repairs, or whatever else it will take to get the house sold/rented. Did you get a chance to get a good look at the house - inside and out?
5) What are the true buying/selling/holding costs of your exit strategy? (closing costs - buying AND selling, realtor fees, cost of borrowing money, property taxes, insurance, etc.)
These are some of the questions off the top of my head, but I'm a newbie, so there are probably a lot more things that I haven't taken into account...
Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
11y
Make her a couple of offers and let her choose. Don't forget to point out the advantages you have in that you are willing to buy the house with her son in it and she doesn't have to fix it up, or pay realtor fees, or wait for it to sell and hope the buyer doesn't back out.
- Offer 1: All cash purchase Lowest price
- Offer 2: Seller finances with x down and a monthly income of y for z number of years, then a balloon.
- Offer 3: Highest price, x down then a mortgage of x years (no balloon) with a payment of y. Note, the mortgage doesn't have to be 30 years, it can be 20, or 40, it just needs to meet her income needs and your cashflow needs.
Real Estate Investor · Maplewood, NJ · Member since 2014 · 19 posts · 1 vote
11y
She owes 18k!!! You have a guaranteed ARV of 100K. Find out what she wants, know what you can realisticly offer. Worst case scenario just wholesale the deal.
Real Estate Investor · San Diego, CA · Member since 2014 · 26 posts · 9 votes
11y
You know Jennifer Talcott makes me think. The son is obviously a deadbeat. If you purchase this home it seems that he will not only be upset at you for "kicking him out" but also upset at you for "forcing" his mother to sell his house. Obviously we all know that that's not the case. However, this is how he may see the situation. Which could end up with holes in the walls, sh** smeared on the walls, and god knows what else. So that is something else you should consider. Because once the sale goes through he could freak out and start majorly destroying the place just because of spite. I think these are all things you should take into consideration. You could even relay these concerns to the mother and see if she can assist in any way.
Seller has a Property that her son is in and not paying rent ( so she has to pay all the bills). She even said that she would have to go back to work to pay her bills ( she is retired).
She is asking $150,000 ( that is what she think it is worth but not sure.) I did a quick look online and it looks like it is worth about $135,000. It does not need any repairs. I have not got the Comps for it yet.
She owes only $18,000 and pays about $1000 a month in PITI.
Do I have a deal here? What do I offer?
It is a nice house is a nice neighborhood
Go to redfin.com & run your own comparables to determine the real value of the property. Don't rely on a quick look. Assuming the value is between $135K & $150K then:
Option 1: Offer her deal that oays off her $18K note so she does not have to go back to work; then lease option or seller finance the property after which you can rent or sell it
Option 2: Offer her a deal w/ a wraparound mtg- Takes over her payments plus give her a little xtra $. Allows her to participate as a JV partner w/ you if the resale of the house
There are tons of other options. Key thing: You have to get the son out of the house.
Wow. Thanks for the suggestion guys. Alot of great points i didnt originally consider. I will def let you know how it goes.
Would the son be able to rent an apartment or other property? Is he unable to pay or does he choose not to pay? Maybe as part of the deal you could offer to pay his move in costs for an apartment. If you can pay off her mortgage and get her son out without throwing him out on the street you are solving a lot of problems for her. This could make her willing to take a lot less money for the sale price.
If she does want to maximize her sale price, I would explain that she needs to get her son out herself. Although I have a feeling she would have done so already if that was her priority.