50k profit!!!...Text book option deal on a high price house... - Posted by Daniel A. Moody

Posted by rudy on May 01, 1999 at 08:19:46:

To get all the help you can get, find the realtor that works this area give them a listing for full price and retain the right to sell yourself…rudy

50k profit!!!..Text book option deal on a high price house… - Posted by Daniel A. Moody

Posted by Daniel A. Moody on April 29, 1999 at 19:33:32:

Okay, I need some pointers on how to move a HUGE house quickly.
I have an option (non-exclusive) on a 300K appraised home for 5K less than county assessment. My option is for 215K. The market would easily bare a $275-300 sale, or I could “give” the sucker away for $250. Bottom line, I could make some serious quick cash on this baby.
Problem: I have never moved a house this big or costly.

I have placed a local ad in the city classifieds as follows:

Secret Garden on Shmel River: 3/3.5 in perfect condition, pool, deep water access dock, $315,000; must sell- will owner finance, rent to own, or discount for cash- ph#

The ad will hit on Sat., but there has GOT to be another more proactive way.
The neighborhood won’t allow for signs.
I have considered “flyers”- but who and where to specifically distribute to?
This house is classy, but for a niche market.

Here’s your chance, all you RE gurus and guru/apprentices:)
What would you recommend I do? especially if I could make 50K on one deal?

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by Judy

Posted by Judy on May 01, 1999 at 16:04:38:

Daniel,

Have you considered contacting some of the major businesses in town who have transferring executives; or how about college professors through the University offices.

In addition, your ad could say something like “executive mini-mansion”, etc.

Just a thought.

Judy

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by Adam

Posted by Adam on April 29, 1999 at 22:20:30:

One Question ,How are you going to sell it with Owner

Financing if your option is for all cash?

Adam

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by James-IN

Posted by James-IN on April 29, 1999 at 22:16:21:

Dan,

Let me first say that higher end properties don’t seem to move quick and I don’t know how much time you have. I typically try to tie up the property for at least 60-90 days if possible (depends on the seller).

This is the exact market that I go after. You can check out my post on the cash flow forum on flipping high end properties. I list some reasons why I like working in this price range.

Couple things you can do to get a buyer if you are trying to do a retail flip or L/O:

  1. Try an ad like this:

OWNER WILL FINANCE!!!
No Bank Qualifying
4bd, 3 ba, 2500 sq. ft.
NICE & QUITE Neighborhood
$315,000 Owner XXX-XXXX

  1. Call all your banks, credit unions, and mortgage brokers to see if they have a customer in need of owner financing and are looking in this price range. Also, let them know how to contact you if they come across a client.

  2. Post your sign just outside of the neighborhood at major intersections.

  3. Put your flyers in the grocery stores, dry cleaners, beauty salons, gas stations, and local resturants where you are allowed. Tell the owners you will give them a referral fee if the buyer came from their store.

  4. Check with the local realtors to see if they have a client looking for a home and are in need of financing. You got enough profit to throw a couple bones to a realtor.

These are just a few ideas that I have used to get started. So, if you want to make the $50K profit, start getting on the horn and walking the pavement.

What I have found, that it is hard to get started at first. When you do, however, you will end up with more buyers than properties. Focus on getting the buyers. In fact, who says you can’t run an “owner finance” ad without a house.

Let me know how it goes and if I can help in qualifying your buyers.

James-IN

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by nancy cason

Posted by nancy cason on April 29, 1999 at 20:03:32:

One little suggestion. I would change the words “rent to own” to lease with option to buy or land contract etc. Rent to own appeals to lower income groups and may be offensive to your market.

GOOD LUCK
NANCY

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by JohnBoy

Posted by JohnBoy on May 01, 1999 at 24:01:31:

The ad doesn’t say “Owner Will Finance 100%”. It just says owner will finance. The buyer comes in with a down payment. You get the buyer a new first mortgage for as much as they can qualify over and above your purchase price. Then you as the seller carry back a second mortgage for the buyer. (Owner Financing)

The home is listed at $315k. If your buyer can qualify for a new first at 80% LTV, that would be $252k. If the buyer comes in with only 5% as a down payment, that would be $15,750 down. $315k - $252k = $63,000. $63,000 - $15,750 down = $47,250. You as the seller agree to carry back the second for $47,250.

The new first of $252k plus the buyers down payment of $15,750 = $267,750 total cash at closing. $267,750 - $215,000 selling price leaves $52,750 cash in your pocket plus the second for $47,250. You make $100k on the deal.

You could even offer to pay all of your buyers closing cost on this deal to help find a buyer faster and still walk away with a large chunk of cash with a nice second mortgage on the deal.

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by JohnBoy

Posted by JohnBoy on May 01, 1999 at 24:01:31:

The ad doesn’t say “Owner Will Finance 100%”. It just says owner will finance. The buyer comes in with a down payment. You get the buyer a new first mortgage for as much as they can qualify over and above your purchase price. Then you as the seller carry back a second mortgage for the buyer. (Owner Financing)

The home is listed at $315k. If your buyer can qualify for a new first at 80% LTV, that would be $252k. If the buyer comes in with only 5% as a down payment, that would be $15,750 down. $315k - $252k = $63,000. $63,000 - $15,750 down = $47,250. You as the seller agree to carry back the second for $47,250.

The new first of $252k plus the buyers down payment of $15,750 = $267,750 total cash at closing. $267,750 - $215,000 selling price leaves $52,750 cash in your pocket plus the second for $47,250. You make $100k on the deal.

You could even offer to pay all of your buyers closing cost on this deal to help find a buyer faster and still walk away with a large chunk of cash with a nice second mortgage on the deal.

What an excellent question. (nt) - Posted by Kev.

Posted by Kev. on April 30, 1999 at 11:14:31:

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by Irwin

Posted by Irwin on April 30, 1999 at 06:54:24:

I agree. “Rent to Own” language tends to keep away everyone but the low end buyers. You take 50 calls to find one person who isn’t either just out of, or just going into bankruptcy.

Re: 50k profit!!!..Text book option deal on a high price house… - Posted by rudy

Posted by rudy on May 01, 1999 at 08:19:46:

To get all the help you can get, find the realtor that works this area give them a listing for full price and retain the right to sell yourself…rudy