Posted by Rick (MD) on September 07, 2003 at 17:49:04:
Paul,
You are a broker, so don’t forget your other option.
Why walk away from a good listing. I think with a little more effort you could have signed him up and made your 6%. Call him up again and just say " Hey Bill, This is Paul. I’ve been giving this some thought and I think I have a solution to your problem. What time can we get together? "
Then you get back over there and take one more swing!
Help on 1st deal! - Posted by Paul Maynard
Posted by Paul Maynard on September 04, 2003 at 15:46:09:
Good Afternoon,
I had a very interesting first meeting with a potential client. So, I’m emailing everyone I know who can possibly help me put this deal together.
Looking for help on my first deal. Last week I started using the email marketing campaign, and I have found someone who seems pretty motivated.
Just to let you know my only experience, besides being a Broker, has been reading a couple of REI books.
I went over to this persons house with one intention, and that was to just get in front of someone. We’ll here’s where I’m at;
He has to get out of this because his company is moving him back east in May (that’s when his kids finish school.) He just wants to get out of his mortgage, and have a place to live until May.
He has a totally remodeled 4 bedroom, 3 bathroom house in a nice place in Denver. He had the house appraised in February 2003 at $460K.
His mortgage payment is $2,700 a month, and Insurance & Taxes are paid up through next year. He also has a balance of $409K.
I first approached him with a L/O, but that’s not going to solve his problem. So, here’s what he wants.
He would like to get his mortgage cashed out of $409K, and live in the house until May paying rent of $2,100K. He started at $1,700, but I talked him up to $2,100 (that’s as high as he would go.) He said that since he would be giving up any possible equity that he would like to pay a little less a month than what he is currently paying.
He doesn’t have the time or wants to put the effort into trying to L/O him self. I asked why doesn’t he just sell it through a Realtor (which I am), and he doesn’t want to pay any commissions and just wants to get out as fast as possible.
The rents in the area run from $2,000-$2,500. I believe we could possibly get around $2,500-$2,700 for a L/O.
Now here is the most amazing part (at least to me for my very first face to face.) He told me that if I could help him cash out, and rent back from me for $2,100 a month he would be utterly grateful. Then he got on his hands & knees and started bowing down to me, got up and gave me a big huge, and shook my hand in the most friendly way. I just met this stranger 45 minutes prior. I told him that I wasn’t sure that I could do this at all, but I would look into it. That was it, so if this is a indication of what this business is going to be like…I’M IN!!!
Now, down to business. CAN ANYONE HELP ME HELP HIM? Advice, Partner…whatever. He will sign a contract as soon as I bring one to him. I’m not completely sure how to fill out the contracts on a deal like this but I can probably figure it out with someone’s help. I don’t have the good credit to get a loan, but willing to do all of the paper work going, and if L/O was the option then I would do all the work to put that in place. Just let me know how anyone can help.
So, someone please contact me ASAP. I didn’t get anything in writing, but he shook my hand and promised he wouldn’t talk to anyone for about 5 days. I believe him. I know I’m new at this but I can read people very well. Anyway, I promised him I would contact everyone I knew through this group and see if I could put a partner together to help him. So, here I am. Someone please help me put together my first deal with me, and let’s help someone…and make some money.
Paul Maynard
(303) 932-6312
P.S. I work a night job starting at 5 p.m. MST so either contact me before that or in the morning.
Re: Help on 1st deal! - Posted by Paul Maynard
Posted by Paul Maynard on September 07, 2003 at 10:34:31:
Thanks for all the input. This is what I was looking for.
I went back, and explained to him that this wasn’t a win/win situation, after all the advice I recieved from this board and many others. He kept prodding me, and telling me how this is such a great deal. So, I just told him good luck and walked away.
Thank you again everyone for sharing your experience with me.
I’m not discouraged at all. I feel that it was a good first experience, and looking forward to getting in front of more people.
Paul Maynard
This IS a good deal… - Posted by B.L.Renfrow
Posted by B.L.Renfrow on September 04, 2003 at 22:59:29:
…for the seller, if he suckers you into this.
Let’s see…mortgage payment is $2700, he wants to continue living there and pay you $2100. Yeah, I’d get down on my knees and kiss someone’s feet “in the most friendly way” if they’d do that for me too.
And about that equity: you say the seller got an appraisal for $460k. Remember that appraisals are NOT scientific, and often not even realistic…especially if it was ordered and paid for by the seller. It’s often said that in high-end properties, the top 10 percent of the value is “air” – meaning it’s not real, or vanishes if you need to sell quickly. Hmmm…$460k minus 10 percent…and – imagine that – you’re darn near right at the balance owed.
Also, don’t forget – and I’m sure you know this, being a broker – these high-end properties can sit for a long time before a buyer comes along. But, maybe that’s not the case in Denver. I don’t know.
The only approach I would suggest, unless you want this deal to be your first AND last investment, is to wish the guy luck and move on. But, if you don’t believe me or just aren’t sure, offer him $10 for an option, and start marketing the heck out of it and see what happens.
Brian (NY)
Re: Help on 1st deal! - Posted by js-Indianapolis
Posted by js-Indianapolis on September 04, 2003 at 21:30:28:
Email campaign? Please do tell. Who are you emailing, and where did you get the names? I tried to email a bunch of old FSBO’s once, and got a 0% response; give or take 0.
In Denver - Posted by Franklin
Posted by Franklin on September 04, 2003 at 17:01:59:
I’m in Denver also (Hi!) so we’re probably looking in the same general market. You’re a realtor, how long does a $460K house take to sell here given the current market? How good is his appraisal?
Anyway, I wouldn’t take $2100/mo if the pi is $2700/mo and it sounds like piti is going to be $3000/mo (tax and insurance assumed at about 9/10th?) or did I miss something here? so you can LO it for the high side at $2700/mo and you get what? -$600 until January, -$900 until June and then (if you get the LO) -$300/mo after that? That comes to -$10K so that you can go compete to sell in the top 5% of all houses on the market?
And straight buying might not be any better assuming 6.25% you’re looking at $2600/mo PITI right? Not much cash flow there.
If you can sell it, you’re gonna clean up a nice profit! But I’m a greenie in this so listen to others before me.
I’d love to hear more on it though, give me an e-mail and we can talk about Denver!
Mort 2700/mo - his payment 2100/mo hmmmm… - Posted by mattc
Posted by mattc on September 04, 2003 at 16:26:47:
How would you do this for him - at a profit to you?
If you took over the mortgage sub2 - you would have
a 600/month negative cashflow minimum.
If you got a loan for 409K - a big loan - would you
be able to get payments under 2100/month?
What happens in May? I have heard that there
can be many problems renting back to the original
owner. What if he changes his mind in May and
decides to stay?
This doesn’t seem like a deal - but maybe the village
elders here will point to my flaws…
Good luck though,
mattc