I can smell desperation/deal but how to set it up? - Posted by Erick

Posted by James HArris on June 14, 2006 at 06:11:50:

Lease option or owner finance.

I can smell desperation/deal but how to set it up? - Posted by Erick

Posted by Erick on June 14, 2006 at 01:32:16:

Hay guys,

Im a sub for a builder who has 5 SFR up for sale in a market that has turned very soft! Just last year, these new little 1700 Sq Ft houses were FSBO and moving in less than 30 days! Now nothing is selling, he’s had these on the market since January, and hes picked up a Real Estate agent to try to move them (still nothing). Needless to say, things have become VERY tight money wise with him - no doubt because the houses are not moving and he has other lots waiting for homes that he cannot biuld on. Im familiar with Real Estate in that I own some commercial Apartments, but Im leveraged pretty tight and would have to approach a deal with him creatively… But Im starting to smell blood, and Im wonding if I should sit on the sidelines and watch him sink or maybe, somehow, set something up that could be a win win for both of us.

Any ideas? Thanks in advance for you thoughts in this matter :slight_smile:


Re: I can smell desperation - Posted by GMann

Posted by GMann on June 14, 2006 at 09:17:49:

“You make your money when you buy the property…”

This quote is commonly used on this board and every investor book out there. If the property isn’t selling then why would you want to buy it? You need to come up with a price that would attract any buyer regardless of market conditions. The real estate market is only going to cool down from here in the next 2-3 years.

Be very careful with new construction if the market is weak. You may buy 1-2 of the 5 properties and then the builder gets foreclosed on. The other 3-4 properties will be sold at auction and there will be new benchmarks set for ALL the valuations in the subdivision.

Also, when you purchase a property in a subdivision the price you buy the property for will effect the appraisal on all the other properties. If you buy it at a significant discount then it lower the value of all properties in the subdivision. An appraiser can’t get a better comparable than a house that is in the same sub-division.

Always remember the quote! Best of luck!