I just got off the phone with a Seller and asked him basic questions about the property. The property is a 2 bed 1 bath and the value is 71k and he said the only things that need repair is new carpet and linoluem, the property is 960 sq ft. He said the debt on the property is 51k and they need to sell by the end of May as he has already moved to another state for a new job but wife is staying behind until property sells. I did the 70% ARV but i am not sure if I should just say about $7/sq ft in repairs and not sure what kind of offer to make since the debt is 51k. I told him I would get back to him soon with an offer. Can anyone provide some insight/advice PLEASE! Also comps in the area are between 70k and 74k
This doesn't sound like a deal to me. Run the numbers:
70k Selling Price
4200 Realtor Fees to Sell
1500 to Close on Sale
1500 to Close on Purchase
500 Utilities while holding
800 Taxes while holding
200 Insurance while holding
Flooring throughout ~$3k
Paint throughout ~$1500
Misc Repairs and landscaping while holding ~$4000
You can adjust closing costs/utilities/taxes, etc based on the property and also your material and labor rates for your state but this ends up being ~$52k leaving no room for profit even if you allow him to break even at closing or do a Sub-2 Deal. I would offer him $40k and see if he is willing to bring money to the table to get out of it.
Otherwise on to the next real deal...Remember 25 calls to get 1 deal
If you could negotiate to buy it subject to with a few hundred or $1,000 down at closing, I would think you could market that to a buy and hold investor for a modest spread on the down payment.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.