All Forum Posts by: Larry Turowski

@Hayes Mercure If it is worth $155K why would he sell it for $100K, let alone $120K.  I mean, he might, all things are possible, but if it is rehabbed he can just drop his price to $140K to sell it.  If he defaults he'll still have months before foreclosure.  I really don't think you have a motivated seller here.  And, no, there really isn't a way you can buy it and leave his mortgage in place without a subject-to deal.

As long as you are not afraid of being scoffed at, you can tell him, look, I'd normally want to buy this at $100K (I have to resist scoffing at you myself) but I know this is rehabbed and ready to go.  What is your best price you can give me?  And see what he says.  As a newbie I think it is helpful to try negotiating just for the experience, even when you are 99.99% sure you will fail.  See what he'll come down to.  Maybe it is $159K.  Talk a bit and ask repeat it, asking him, "So, $159K is your best price?"  Maybe he'll come down to $157K.  None of this is helpful to you except in cutting your teeth on negotiating.  

@hayes (the little @ symbol isn't working today), I don't see a deal here.  He has a loan and that will need to be paid off, which means you'll need to get a mortgage.  It is fully remodeled and he is asking over what you believe is market value.  He may want to get out of his payment, but he doesn't sound that motivated and he should be able to easily sell it if he prices it right.  You could by any house at market value.  What makes this one so special?  The only thing could be the terms of purchase.  YOu don't really want to get into messy deals like subject-to and sandwich lease as a new investor.  Unless he is coming down to a price that works for you, keep looking.

Is your after repair value correct?  You basically are into it for full market value?  This isn't a deal I would do.  Plus your capex, maintenance and vacancy are low, 3% each, and no management.  This all gives you the illusion of cash flow.  Hopefully you'll get some appreciation out of it.  Have you heard of the 1% rule of thumb, that you want to get at least 1% of market value (some would say purchase and rehab cost, which for most investors would come out to about 20% less) for rent for it to make a good rental.

Time will heal wounds, though.  Most peoples first deal is not their best.  So hopefully you can improve from here.

@Allana Alex Plank flooring, and specifically vinyl plank flooring has come a LONG way in the past few years.  I'm starting to use it more and more.  It is easy to install, durable, and in many instances looks better than tile.  With only 200sqft it isn't going to make a huge difference in your budget either way.  But I'd give vinyl plank a try.

@Michael Doherty Your potential profit from selling at $230K is $66.2K before selling expenses and taxes.  ($230K - $134K hard money payback - $24K original investement - $5.8K to paint).

Your potential money in your pocket from refinancing is $7K before closing costs ($165K - $134K hard money payback - $24K original investments.)

Purely from a most profit perspective, if you think you can do this again, you should sell.  Having cash is always handy.  You could maybe two two flips at once with that money, or take on a bigger project, or avoid some of the hard money.

@Linda T. you said it yourself. “Story: I’m not an investor.”  That’s the difference. All investors have not just the one, but perhaps many that got away. But investors know that is not the last one. Not if you are still looking, still hustling. I’ve had so many deals slip through my fingers for one reason or another: not pulling the trigger fast enough, being too timid, just bad timing or not knowing what to do with the property. But I’ve probably been the recipient of deals that got away from other investors.

I do still think back at a couple of them wistfully sometimes. But I can’t think, “No sense even trying anymore, I missed my opportunity.”  I’ve got to focus on the ones still out there.  Not too different from life in general.

@Jason James One thing missing in this thread is that it has got to be a great deal!

Lots if not most experienced investors will make aggressive cash, no inspection, quick close offers. It may even be asking price or over asking price, but it has got to be a great deal. I’m not out to overpay—or even pay market price. 

 Yup I thought the same thing  when you said that. Or see if you can assign the deal (wholesale it). 

In response to your previous question to me, I don’t like partnering either. 

@Ben Beaudoin Yes but in NY, both late 1800's and early 1900's. But that is common where I am. I'd be careful if it is uncommon where you are. If you can't find good comps then expand your search. Find any old houses sales and find the comps for those. Did they sell for a similar price to newer homes if the same size and features? Adjust your ARV accordingly. Or heck call some appraisers and just ask them about older home values. It'll only take 2 minutes of their time.

@Jonathan Bombaci I think @Matt Lefebvre’s reply is brilliant. Honestly, this is a decent deal for someone who has the cash to take care of these capital expense items immediately. For you, the down side risk is too high.  Unless you can get the price down another $50k I’d walk—or get someone to partner with you.