PLEASE HELP??!!!???

8 Replies

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

Originally posted by @Darren Nichols :
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

Hi Darren,

Have you actually been to the property and taken a look inside? From everything I've read the sellers definition of "just needs a little TLC" can vary dramatically from what your buyer would considered "a little bit". Doing the quick math (ARV*0.70-Repairs($7*960)) Your offer would need to be 42,730. Maybe you look at doing a Lease Option?

I hope this helps

@Stephen Menches I haven't looked at the property yet I was just returning the guys phone call and asked him all these questions. I have never made a wholesale deal and I would have a clue on how to do a lease option. I got the same number as a potential offer I just dont know if that is a good offer or not considering he still owes 51k on the property

Originally posted by @Darren Nichols :
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

Here is your problem,

2 B are hard to re sell and low rents.

If the debt is 51 and resale is really 71, it is too friggin THIN.

Most wholesaling deals are .65 less repairs less financing costs less holding costs less resale realtor costs.

I use 50% of value for minor rehabs net to seller.

50% of $71 is 35.5K.

soooo.

Lease options are for pretty houses no work, 3-4 bed 2 baths, good schools.

Your product is not good as in not in high demand.

You could...

1. Get an option for $56 and he nets $5K, sell the option. Thats crap.

2. Think about negotiating a JV with the Seller

a. You bring in private funds and do rehab say max $10K

b. You pay private lender 12% apr for private loan $10K BUT on a monthly basis simple interest 1% a month

c. You sell it with an agent, seller pays commission and half closing costs

d. You make $5K as a JV fee

e. thats Private money plus interest plus your jv fee of $5K plus sales costs

f. Much more of a profit for the seller. You make $5K to supervise the rehab and get private funds.

in this example you make $5K,

seller nets $71 - $10 rehab - $5K your jv fee - $1K interest - sales costs 8% - 10% or about $48K, better result than $35K.

This is called "JV with a Seller, Beats a We Buy Houses Offer by 15% or more."

@J Scott

WDYT?

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

Originally posted by @Brian Gibbons :

This is called "JV with a Seller, Beats a We Buy Houses Offer by 15% or more."

@J Scott

WDYT?

I just had my first opportunity (well, the first time I actually considered it) to do this a couple weeks ago, and while it didn't work out on that particular deal (seller wasn't interested), I frickin' love this concept.

Being able to save one whole set of closing costs and not having to commit to a profit margin for the seller upfront gives you a lot of leverage to make a thinner deal work when it otherwise wouldn't.

I can't wait to start proposing this on future deals... :)

@Darren Nichols

I think it really depends on the condition of the property. Without getting a good look inside you'll be hard pressed to know the answer. If he'll take less than he owes, great! If not, the margin is pretty small and you'll have to make sure the numbers work out in your favor. If all the property really needs is what the sellers says, I think you could come out with something in your pocket. If it needs more, my gut says pass. I hope this helps!