So... I'm pretty new to RE Investing and finally found "the perfect deal..." only thing is, its in Indiana and I live in FL. I always thought my first deal would be something in my own backyard but that's out the window...
I have been searching the forums for answers but I think this situation is a little different that what I've found. My deal is as follows...
There's a woman I met at my day job that wants to sell her home to start her granddaughters college fund. The home is in Indiana. The price is very tempting, from what she says there are not many repairs the home needs and she's VERY motivated to sell.
I immediately thought to assign the home but in order for the numbers to work out I'd need her to drop the price. So here are my options (hopefully you guys can help out)
1. Assign the home - seller knows my commish - possible broken deal
2. Double close - double costs - less commish but successful deal
3. Refer IT - ask for referral fee - possibly not paid.
Please HELP.... I like the idea of referring it since I won't have anything to do with the paperwork (the scary part for my first deal).
@Marc Johnson welcome to BP!
You are correct, most people like to start off in their own back yard and expand from there.
It sounds like this would make a good wholesale deal. You don't have to show the seller what you make with an assignment - maybe you can rethink this option.
Otherwise, if you go the referral fee route, I would suggest getting some a NCND [non compete, non disclosure] signed before handing the deal over to someone.
What city is it located in?
What are the numbers? [purchase price, rehab, ARV, etc]
If it's in Central Indiana or Indy Metro - I'd be interested in it for sure.
You might also reach out to an investor here in Indiana in that properties area for a "boots on the ground" rehab inspection. Everyone says their home doesn't need much work. My house doesn't need much work, but I know I would like to put about 20K into it to have it nice.
Shawn its in Seymour INdy. We agreed on 30k. The only comps I have averaged at 135k ARV, but mine is a corner lot and it's facing a railroad track. (Seller says trains rarely pass through.)
We spoke about 4 times and she's pretty persistent with the idea that it needs Very little work... But from Google maps and what little info I gathered on my own it could use 10k at least to get back to its former glory.
With a wholesale... How would I hide my profit from the seller, would it be by making the assign contract an addendum to the purchase contract?
She's a sweet woman so I don't want to make her drop her price just to make a few extra bucks.
The similar homes next door to my sellers home all appraise at $105k but we know how that goes.
Honestly, right now you are clueless as to whether this is a good deal, without knowing the area, immediate comp.s, someone doing a visual inspection, etc.
@Marc Johnson a $135k home in Seymour is a a lot of house!
IF, in fact, it is worth $135k and by using the 65% rule - it would be worth ~$87k all-in.
Let's say it needs $30k in rehab. And you get a $5k assignment fee. That puts the all-in price at $65k. Those numbers work very good.
Like all good wholesale deals, it's all about having the correct numbers. I would suggest calling a couple larger brokers in the area and ask what homes in that area are selling for and if there is much movement. Then look at the pictures she has to confirm how much it needs. You may even want to go as far and pay for an inspection [about $350] to get a detailed punch list of what work is needed to be worth the ARV.
When one assigns the contract, the seller doesn't see that separate assignment contract and therefore doesn't know how much you are making.
I don't know of much going on in the Seymour market and you may have a tough time assigning it...
thanks for the honesty Wayne.
Having said that... I do have my outs in the contract and as you put it I can't really access the deal without getting more into it. All I know I she is VERY motivated to sell our favorite words right?), and for the above reasons I have been leaning towards assigning or referring... I'm looking for advice. Thanks
I think you've give me enough of a head start to make this thing happen. Thanks
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