Seller wants 70k and worth 80k. What you think?

Question

Without really talking to the seller she mentioned on the voice mail that she's willing to take 70k and its worth about 80k and shes will to seller finance. Not sure of any repairs. I'm guessing it prob needs a little cleaning up. Haven't been able to talk to her on the phone. If I sell on owner financing I could prob get 85k for it.

Haven't tried talking her down on price yet. Any suggestions?

Steve Babiak · Answer

I find that in my desired areas, I have to pay less for a buy and hold rental than a flipper pays, so that the market rent amounts cover all the expenses of the rental.  So this goes both ways ...

Account Closed · Answer

What Jon Holdman said in his last two sentences.  :)

John Stevenson · Answer

From the information that you have provided, it does not seem to be a purchase that offers the potential for a high return. If you are only realizing a $10K  profit - that will be quickly eaten up through closing costs (both in buying and selling), any repairs and cost to sell.

I believe that you would have a much better return if you looked into foreclosure properties. Their rate of discount is much higher.

Ned Carey · Answer

Jon Holdman wrote "Whats your plan for the place? What's the real value?"

I previously wrote "without more specific information it is hard to give a suggestion. "

Braden,

You haven't given us enough information. From what you have written it appears that you haven't even visited the property. There are some key questions that need to be answered before discussing exit strategy. Two obvious questions are how much does it need in repairs, and what are the potential rents?

Do to the SAFE Act selling with owner financing to a homeowner may be more problematic than you expect. It may limit your buyers to landlords. Actually wholesaling to homeowners is almost always more problematic than to investors.  I just don't see much meat here to make it a good investor deal.

Good luck and keep us posted on your results  - Ned

Braden Souder · Answer

Not enough in the deal to wholesale. I think the exit strategy would be to buy and sell with owner financing. I didn't even ask her for owner financing, she just offered it, and I haven't tried working on the price yet.

Any better suggestions on exit strategy? I could also do a lease option or a work for equity if it needs repairs. The Value is correct tho based on the address she gave me and my comps. I think I could get a little more if I sell on owner financing.

Michael Lauther · Answer

Braden Souder what something is worth is a highly subjective thing. in the end it is what someone is willing to pay and that will depend on your ultimate use. If it is for rehab and flip it will require a deeper discount than if you are fixing it up  and renting. You should know what the property is worth to you based on your own business plan. I am a buy and hold investor making my money from rental income. I can pay more than an investor who wants to fix and flip (not that I would do so if i didnt have to).

Jon Holdman · Answer

Whats your plan for the place?  What's the real value?  If the seller's telling its worth $80K, its certainly worth no more than that.  But probably less.   Doesn't appear to be any margin for a rehab or wholesale deal.  Could potentially be OK as a buy and hold.  The seller financing does sweeten the deal if you're going to hold.

Ned Carey · Answer

If it is truly worth 80K, buying it for $70K isn't a deal for me. However if she thinks it's worth $80K and is willing to take $70K, that is a sign of motivation and perhaps you can get her down to a better price.

I would be pursuing this hard but without more specific information it is hard to give a suggestion.

Seller wants 70k and worth 80k. What you think?

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