Have a good deal...need some creative ideas!! - Posted by Justin

Posted by DanM(OR) on June 22, 1999 at 10:33:47:

I am with Dick. Why would you want to flip it? Buy an hold is get rich slow, but I do believe there is a place for properties to hold onto long term. If you can’t work this deal let me know. I would love a deal like this here. A four family like this would go for about 225k here.

Good luck!

Dan

Have a good deal…need some creative ideas!! - Posted by Justin

Posted by Justin on June 22, 1999 at 24:04:57:

Hello everyone. We found a motivated seller today. Here is the scenario:

Brick 4 family house in a lower income area. Two 2 bedroom units and two 1 bedroom units. All units are currently rented. Gross rents are $1550/month. Landlord pays gas and electric. From speaking to the owner, the only repairs needed are on the exterior (it’s not bad, about $5K max).

I asked him how much he needed for the property, and he said 45K. He is willing to carry some paper, and seems quite flexible. I haven’t yet run comps on this house, but I know 4 bed SFHs in the area go for 50K fixed up. This house will be my 2nd deal, and I want to flip it. I want to structure this deal for maximum profit and marketability. (I am aiming for $10K profit). I do not want to put any of my own money into this deal, but I feel that the low price coupled with the owner’s willingness to carry a 2nd mortgage make the house a very good deal. Anyone have any suggestions on how I should set this deal up?

Thanks…

Justin

Re: Have a good deal…need some creative ideas!! - Posted by Colleen in SLO

Posted by Colleen in SLO on June 22, 1999 at 16:38:31:

I agree with Dick and Dan, it’s an awesome deal, buy and hold. Here’s how I would do that:

offer 42,000 half cash now and he carries a second
Advertise in your paper "$26K 50% LTV 30 years 12% int"
Or, depending on yur area, find a hArd money lender willing to make this loan. (It shouldn’t be too hard)
Pocket 5000- that’s your cash, baby!
Pay the seller whatever he wants per month on the $21,000 second loan, just adjust the interest rate and term to save you the most money in the long run. (I’d aim for 6% interest for 10-15 years)

Unless the vacancy rate is really bad or the seller is misleading you about something, you should make AT LEAST 500/month cashflow, even after taxes, insurance, property managers and other expenses are paid.

Or, if you’re really hot to flip it, offer 40,000 cash and ask for 60-day escrow, find someone who will buy at 55,000 to 65,000 with their own financing, or someone who will buy at 75,000 with 20% down if you finance and sell the note at closing. I guess it depends on how the numbers work out.

Hope this gives you some ideas…let us know how it all works out!

Re: Have a good deal…need some creative ideas!! - Posted by Dick Schmidt

Posted by Dick Schmidt on June 22, 1999 at 03:51:42:

WHAT!?!?!?! Hock your soul, sell your children and buy this place. My mortgage calculator says the payments will be under $450 a month unless the interest is outrageous and even if you allow 50% for expenses you have a nice cash flow. Once you have it tied up you should have no problem refinancing for more than $45K. This return is just TOO good. Make sure about the insides of the places then MOVE. This is the kind of place that can support you for the rest of your life if you treat it well.

I Have a question about this post?? - Posted by Jeremy

Posted by Jeremy on June 22, 1999 at 22:12:30:

I’m not sure what Colleen means by advertise "26K 50% LTV 30YRS 12%int " Are you advertising a note for sale?? If so would you really get the full 26K?? I’m a newbie looking for his first deal and still trying to understand things. Thank you