Posted by ken in sc on May 02, 2000 at 07:34:46:
I don’t know why this question is in this thread, however, typically it is applied to the downpayment or taken of the price. Either way, you don’t need to have that money in cash.
If you were me, what would you do? - Posted by Charity
Posted by Charity on April 29, 2000 at 20:42:38:
I have a potential deal on my hands and I am not sure what to do. I am a real estate agent and I have a seller who is out of state and wants to sell a home he has rented out for 20 years. The house in good condition would definitely sell for 95-100K. It needs 15-20K in repairs. I think I could get it for around 60K.
My question is do I wholesale it to another investor or just list it (as I normally would). Obviously, I could make more money wholesaling it, but my concern is that an investor won’t want it because they wouldn’t get enough from the hard money lender to do the repairs.
The repairs should be on the 15K side, but is there enough profit in there for an investor or should we just list the thing and sell it?
Thanks! I’m still learning to think “outside the box”!
As an agent be careful, there could be a conflict of interest… - Posted by David Krulac
Posted by David Krulac on May 02, 2000 at 05:36:07:
everytime its discussed on whether to become an agent, this situation should be discussed. As an agent you are to put the clients interest ABOVE your own. Its called fidiciary interest. If you can get get say $80k for the seller on the open market, then you have to clearly explain that probably in writing to protect yourself, before you buy it for $55k-$60k.
David Krulac
Re: If you were me, what would you do? - Posted by ken in sc
Posted by ken in sc on May 01, 2000 at 16:22:29:
What does the house need? Many times, an entire rehab is not needed. If the house needs say a roof, paint, carpet, new heat pump, and misc items - then I would just put on a new roof an install the heat pump. That might cost $7,000. Then sell on ls/op for low down with the tenant/buyer to do the other work needed, and price it at $95,000. You still have a big spread because you have lowered your repair costs. You will pay no comissions or closing costs if you sell ls/op so your profit will be good that way.
I am a broker like you and sometimes when I have a house like this I will list it for the $95,000 in the MLS as well as offer it in the paper on a ls/op. If an agent brings me a good contract with qualified buyers, then what the heck - just sell it. The money will be less total but you get it sooner. And you still do very well for only owning the property a month or two and only hiring 2 subs rather then an entire rehab.
I would… - Posted by Bud Branstetter
Posted by Bud Branstetter on May 01, 2000 at 01:12:32:
Try to get owner financing for six months to a year. This way I do not have the cost of hard money financing except for fix up. When you say 15-20K the question is what is involved-roof, carpet, paint, all new kitchen? I may only spend 10K to accomplish the same thing you do with 15K because of the type of workers that investors use. I also may do just the main cosmetic work and let the new owner in for 5K less.
There are those that would not do it because they can’t borrow more than 65% from the hard money lender. If you have any of your own money for repairs you can do it. The goal is usually 20%/20K profit after everything on a deal like this. Less than this you get bit when a new HVAC or foundation work is needed that you missed. You could also consider split funding-20K now and 40-45K in a year.
Too Skinny To Rehab. - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on April 29, 2000 at 21:55:58:
Charity,
This deal would be too skinny for me as well as most of the rehabbers that I know. If your numbers are accurate ($100K after repaired value and $15K for repairs), I would want to get into the deal at no more than $55K. BTW, keep in mind that hard money is just one source of funding for rehabbers. Many rehabbers have alternative sources that allow for higher LTV?s (including acquisition and repairs).
An alternative would be to wholesale the property to an owner occupant looking to save money by purchasing a fix-r-upper. This exit strategy is fraught with its own set of challenges, not the least of which is the buyer?s ability to obtain financing.
IMHO, you are probably better off just listing the house.
On the other hand, I have seen dozens of junkers sell recently for a whole lot more than I would have paid. Go figure!
Perhaps others here will offer different opinions or some more suggestions.
Best of Success!!
Jim Kennedy,
Houston, TX
Re: If you were me, what would you do? - Posted by mackensie fils
Posted by mackensie fils on May 01, 2000 at 18:15:55:
Hi
I’m a new Real Estate Investor. I know alot about creative investing but i’m confuse about one thing when it comes to Lease Options. For an example you have a rent credit of $300 towards the purchase price for a term of 36 months on a $65,000 property. After the 36 months is up you have 10,800 option credit attributed to the selling price. My question is, is this equity that is not coming out of your pocket when you decide to buy. Or do you have to come up with that amount in cash, and then get a loan for the remaining amount of $54,200 to give the seller their full asking price of $65,000. Please let me know.
Thank you very much