Highly motivated seller

[Brian Charles]

Ok guys so I need some advice on this potential deal. I have a highly motivated seller that lives in South Carolina but owns a investment property here in my area Long Island NY. It’s a 1 family split level ranch that he was collecting 2 incomes off it. Both tenants haven’t paid him in over a year and he’s fed up and really looking to rid the property

Now for the numbers house comps at 490k I got him down to 323k so far and I know I can get him lower. The property does need work I say between 50-70k in updates. I already know at 323k that’s a pretty good deal the problem is he can’t rid the tenants and he’s looking to go as low as possible to sell with tenants. As I know this deal is NY ... in times of covid. I need to know what’s my options provided I take this deal and what’s my options on how to rid the tenant???

[Jerryll Noorden]

Originally posted by @Brian Charles:

Ok guys so I need some advice on this potential deal. I have a highly motivated seller that lives in South Carolina but owns a investment property here in my area Long Island NY. It’s a 1 family split level ranch that he was collecting 2 incomes off it. Both tenants haven’t paid him in over a year and he’s fed up and really looking to rid the property

Now for the numbers house comps at 490k I got him down to 323k so far and I know I can get him lower. The property does need work I say between 50-70k in updates. I already know at 323k that’s a pretty good deal the problem is he can’t rid the tenants and he’s looking to go as low as possible to sell with tenants. As I know this deal is NY ... in times of covid. I need to know what’s my options provided I take this deal and what’s my options on how to rid the tenant???

Repairs are always more than expected and ARV is often lower than you think.

Assuming I am correct,

323 +80 +50= 450

(the 50K is about 10% of selling price.. this is the average we account for in all transaction costs like agent fees and closing costs taxes, etc. etc.)

that would be a 40K profit, without any of the other costs like lending cost, holding costs, insurance and mishaps.

I honestly don't think this is such a good deal to be honest.

That is less than 10% of returns, and that would be OK if you didn't have to be all out of pocket for so much.

To me at least that is definitely not worth it

And whomever invented the 70% rule had absolutely no stinking clue what they are doing. 

Please don't use the 70% rule. It is ridiculous. Forget that rule.