Posted by Ian (Honolulu) on February 08, 2002 at 04:03:11:
Too skinny… why not just move onto a more lucrative deal?
Attention: Stop ,Don’t Read If You Are A Newbie! - Posted by Mitchell The MoneyMaker
Posted by Mitchell The MoneyMaker on February 07, 2002 at 23:57:15:
" How Will You Make The Most Money On This Skinny Deal?"
ARV: $190,000.00
LB: $177,000.00
Monthly Payments: $1,750.00
3/2 …1900 S … 1/4 acre lot
2-Story … New Basement/Marble Fireplace… 9 years old
7% on Mortgage … How would you structure this transaction for optimum profit using your creativity???
Market rents: $1,450 - $1,750 !!!
would this work?? - Posted by Brad (Wa)
Posted by Brad (Wa) on February 09, 2002 at 11:43:13:
I have several houses on the back burner that seem to have higher mortgages than the possible rent or L/O amounts. What I am thinking of doing, let me know what you think of the following…Get it under contract for the loan amount. Possibly with the sellers paying the closing costs. Then find an agent you trust to list it. Have a buyers or sellers agent bonus in the listing to help it along a little. I am sure the sellers have already thought about listing, but tell them that you have a agent friend that can really move houses and can do it cheaper and faster than other agents. In the meantime, place an ad in the papers that advertises it as a real bargain, maybe saying something like “$5,000 below market price”.
It’s simple and may not waste a whole lot of time, which is good for a skinny deal.
I don’t know how effective this would be, would be interested in some input to help with some of my skinny deals!!
Brad.
Re: - Posted by Carey_PA
Posted by Carey_PA on February 08, 2002 at 23:20:45:
Personally, I don’t like those payments, ESPECIALLY with those market rents! I’d pass!
CAREY
I’m crazy enough to do these - Posted by ScottB-NC
Posted by ScottB-NC on February 08, 2002 at 22:45:23:
I actually do some deals like this because with a seller who is motivated enough they make money. Do it like this. 190k- 12%(selling costs for seller)= $167,200. 177k bal minus 167.2k net = (10k negative equity) Seller deeds me the property and pays me $10k cash plus since payment is so high (It doesn’t add up to me with a payment that high and 7% rate BUT) seller pays first $400 per month toward mortgage for 36 months after I take possession. I now have $10k in pocket, a $1350 payment starting in 5 months. I sell on L/O for $204,900 with 5% down and 1,800 per month payment.
Now all of you are going to cry and wail at me - what if he doesn’t pay the 400 each month, how are you going to get the appraisal blah blah. Well he loses, because our agreement is that I don’t pay the mortgage until I get the $400. Worst case scenario the whole deal blows up and I give the buyer his option fee back and walk with 10k. Just want to show there is a way to do it, and I do. (PS none of my deals have blown up, not do I intend to let them)
Re: Attention: Stop - Posted by MoniqueUSA
Posted by MoniqueUSA on February 08, 2002 at 18:18:59:
You’re right, it’s a skinny deal. But if there is no other deal in your entire market to go after …
The 7% mortgage is good, but the $1750 payments seems a bit on the high side. Buy it Subj To CONTINGENT UPON your finding a buyer first. Have the buyer kick-in some amount for bailing him out.
Market it at $199,900 and see if you can find a L/O buyer. Charge $1750/mo to cover the mortgage, possibly offer a $100 rent credit to entice someone to move on it quickly.
MoniqueUSA
Re: Attention: Stop ,Don’t Read If You Are A Newbi - Posted by Mitchell
Posted by Mitchell on February 08, 2002 at 09:47:56:
My mistake it’s not ARV it’s $190,000 FMV. I was using ARV/FMV as meaning the same thing. The house is in mint condition it does not need repairs.
How about this? - Posted by Scot - SoCal
Posted by Scot - SoCal on February 08, 2002 at 09:37:56:
OK, I?ll take a stab. Couldn?t you do something like this?
Get the owner to do a L/O for the loan balance and loan payments for 1 year with 2+ options to renew. Try to give yourself 2-3 months before having to make a payment (owner still making payments, after all you need time to do repairs). Then market as: Rent 2 Own-Bad Credit OK-Needs TLC. Assign your contract to the first person that has $5-10k consideration money (assignment fee).
Seller has house problem taken care of ? WIN
Buyer pays less than ARV for a house worth $190k (with a little work) ? WIN
YOU get $5-10k without having to stay in the middle of a skinny deal ? WIN!
Attention: Stop ,Don’t Read If You Are A Newbie! - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on February 08, 2002 at 08:46:56:
Mitchell,
I would get the seller to either:
A. Throw in his paid for Mercedes or Lexus,
B. Deed over this free & clear beach house/mountain cabin,
C. Bring $44K to the closing,
OR
D. List his property with an agent so that he’ll only have to bring $6K to closing, IF it sells for 98% of FMV within the first couple of weeks it’s listed, and IF his first buyer actually is qualified and closes the deal within thirty days so that his ongoing holding costs are minimized.
Otherwise, I’d do like Ian and Tim suggest and pass on this one.
P.S. You mention the ARV (after REPAIRED value) but you don’t indicate how much those REPAIRS are going to cost. That makes the deal even worse, unless, of course, you are getting the seller to pay for the repairs.
Best of Success!!
Jim Kennedy,
Houston, TX
Attention: Stop ,Don’t Read If You Are A Newbie! - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on February 08, 2002 at 07:29:15:
I would use my creativity to crank up my marketing and find a more profitable deal. I would pass on this one.