All Forum Posts by: Dory Peters

Although I haven't completed one of these type of transactions, I'm working on a similar transaction (list price=310K, ARV=222K, 1st mortgage=180K, and 2nd mortgage=88K). I also intend to do this as a wrap, and I was inspired by a few ideas in some posts and chats I had with Nick J and a post and some videos by Jason H. (You can search BP for the related posts for more insight.)

Basically, I presented my seller 3 different options yesterday: 1) short the second (Nick inspired) and I'll buy on a wrap; 2) modify the second to add a movement clause (uncommon outside of commercial--aka floating mortgage), have the seller to transfer that second lien to another property, and I'll buy the target property on a wrap; and 3) Jason's "'They Pay You' Subject To".

Another way to do this--that I didn't suggest to the seller--is: offer to take over the payments and retail it with a lease-option to a buyer with a few dings--but no evictions, foreclosures, or bankruptcies--on his/her credit. There are other ways to handle this too, but I suspect I gave you enough ideas to get your juices to boil. :D

Actually, I make my offers site unseen. After my offer is accepted, then I'll arrange a visit for one of my team members or myself.

Since I don't want to lose any cents, the numbers first must make sense.

Otherwise, for me it's a waste of time to visit anything that I haven't already put under contract--at least in most cases.

Justin, I'm following you . . . I also don't get Stephen's reservations against "double closes".

I agree 100% with Jon's advice.

Additionally, I assert that one should always make offers with a clause stating that the EMD will be deposited into escrow within a certain period of time after having received a copy of the fully executed P&S. Keep in mind that the EMD is a form of consideration, and there can be none without the fully executed agreement.

You could also schedule a meeting with a score counsellor to help you flesh out a few ideas for your operating agreement and business plan.

Properties are definitely moving where I am--especially in that neighborhood.

For me, this deal would only make sense to me if I could buy it with the right terms--basically as a nothing down deal. The only reason why I even made that offer was because I knew that the seller was--and still is--obsessed about getting a specific number. Stated another way, the point was to meet him at his number while getting the terms I want.

The split funding guarantees I'd only end up financing the property at 70% of ARV, and that I'd pay the remaining balance after the market value of the property appraises for 120% of the purchase price. Which basically means I'd be sitting with at least 20% equity after the refi.

I also use LOIs for both commercial and residential, and I haven't had any problems. However, a commercial agent did grumble about one once, because I wrote mine as a multi-part offer (which allowed the seller select the set of terms that made the most sense to him/her).

Along with what Jon stated, I like to roll-in my holding costs into that all-in figure (70% of ARV in this case).

Scott, it sounds like you're a "seasoned" investor--meaning it sounds like you're speaking from experience. :wink: