All Forum Posts by: Michael S.

Hello!  Wondering how YOU would play this hand?

Purchased a property using a private lender for $27,000 (business partner took title).  Put $21,000 into rehab.  Total investment counting interest/taxes/insurance is $51,000.   Private lender's loan of $27,000 is due in full after 12 months -- it's been 4 months at this point.

Option 1:  Sell for $60,000.  Profit will be roughly $5,000.

Option 2:  I buy it from my business partner for anywhere from $27,000 to $80,000 and rent it out for $1,000 a month.

Option 3:  My business partner refinances the home for $27,000 to $80,000 and pays off lender, rent it out for $1,000 a month.

Option 4:  Your creative solution!

A few notes:

1)  I have a buyer willing to pay $60,000 and I have a renter interested in renting for $1,000 a month.

2) My business partner and I have other rentals together and regardless of who owns it, it will end up in our jointly owned LLC.

3)  We would like to get back our $21,000 investment so we can use it for other opportunities, so ideally if we did Option 2 or 3, we would like to do it for $48,000 or so but not opposed to other ideas!

4)  I have a lender who can do loan as low as $27,000 and it would appraise for $80,000 in my opinion.

5) PITI payment would be about $550/month at a purchase price/refi of about $60,000. Cash flow would be nice and I would have my investment back so am of course leaning this direction.

Thanks everyone!

In

Thanks for the replies.

I'm not asking if it's a deal or not though, I'm wondering if anyone has any advice on how to structure this deal knowing that the seller is willing to partner up and let me keep profits over what his payoff will be.

Wayne.. I could take a second mortgage on his house?

Thanks again.

Wayne,

I should also note that the home is in a desirable area and is basically rehabbed minus the flooring, baseboards, an A/C unit, and finishing repairs of the 2 fireplace chimneys. My contractor could have everything done within 2-3 days and back on the market.

Wayne,

Thanks for the reply.

I would be using my own cash, and he is the one with the mortgage (and title/property taxes and utilities), so holding costs are $0.

Also, I am a Realtor and will save the 3% on the sell side. I also have a retail buyer who I believe will want to buy this at 150k after I finish it, which would allow me to avoid the buyer's agent 3% as well.

I'm ready to pull the trigger on the deal -- I just don't know how to structure it to avoid paying for it.... since he's willing to partner and give me everything over what he owes. Is there a way to work it?

I have come across a potential deal with a seller who was rehabbing a property and has run out of money. He has a mortgage for about 105k and has agreed to sell if he can avoid bringing money to the closing table. The home is worth 150k completely rehabbed and needs an additional 15k to get there. Instead of attempting to purchase for 110k (his mortgage payoff plus outstanding taxes), I've offered to partner with him on the deal and finish the rehab. When we sell I would allow him to get out without bringing money to the table.

How can I structure this deal to protect myself (and my seller)? I can't buy it from him and have him write me a mortgage when he owes the bank 105k, can I? Looking for options... appreciate any help. Thanks!

I'm a member of the Cincy MLS, and I do this all the time. Email me [email protected]

I agree with what you said though, best to read other threads than just this one!

I started wholesaling at the end of last year. I've wholesaled 6-7 probate properties, a few from bandit sign calls, and 7-8 HUD's/Bank owned properties. All of the probates/bandit sign deals were with nothing down and profits ranged from $1200-$6,000. Here's an example for ya:

Probate property in great area, 3/2/2, I call the seller who lives in California. He was inheriting the property which was free and clear and didn't want to make a big deal out of it. He does pretty well in California and just wanted it gone. I told him I work with a group investors who are interested in purchasing it. He set up a time for me to look at it through a neighbor with a key. I looked at it and wrote him an offer -- all cash, close in 21 days. I ran comps and knew that I could sell it to one of the investors I already networked with (and knew what they wanted, that they were active buyers, and that they were very interested in this area). Bottom line is I've had enough discussions with them to know what price they needed it at. Anyway I assigned the house for a 5k fee.

I am a Realtor and in this case I essentially brought the buyer and the seller to the table, and made just over 6% total on the deal. Could I have listed it? Yes. Would he have gotten more money that way? Yes. Was it the right solution for this seller? No.

Every seller that I visit -- I leave them with two numbers. First is what their house would sell for if they list it with me, and how long it will take (in my opinion). Second, is what I can get them in cash if they want to close in 2 weeks. Seller's love options and you'd be surprised how many want to talk to buyer's (or people who deal with them), as opposed to just Realtors. The truth is that many Realtors want to list the house so that other agents can bring the buyer. They don't know any buyers themselves. Of course, this can still be an effective way to sell your house (using the MLS).

Wholesalers can very effectively be honest with sellers and explain their position in the deal without blowing their chances of making any money. The fact is an assignment fee is often times very close to the 6% that a Realtor charges, but I believe it is a solution for a different type of seller than perhaps you are aware of.

Good luck in the new year!

I work with a few investors who live in the Phoenix/Scottsdale area. I am a Realtor in Dayton, OH. One of them is a good friend of mine who was about to buy a house in Phoenix for around 150k which he was going to rent for $1200/month. After talking with him over the holidays while he was in town, he has changed his strategy and decided to invest in Ohio (given he has family here, so the area is not foreign to him).

He is interested in condos -- here is the norm here in Ohio: Condo in good area is 2bed/2bath, over 1,000 sq ft w/ garage, for sale $47,000. HOA is $120/month, taxes $1400/year. Condo needs under 2k in updates/repairs and will be rental ready. Expected rental rate is $750-$850. You do the math!