is there a way to make some money on this deal? - Posted by copie
Posted by copie on March 23, 2000 at 19:15:32:
i have a potential deal with a motivated seller but i’m not sure that it can work out profitably. tell me what you think and what you’d do.
it’s a duplex here in the bay area, 4/1 and 2/1.
the out of state owner let her partner manage it and he didn’t. rents weren’t paid in over a year and the tenants turned it into a crack house.
once they were finally evicted, the owner went in and the place is trashed. they even took the kitchen sink!
i had a realtor who i work with who does a lot of rehabs take a look at it. he’ll handle the sale and purchase for me with the standard 6% commission on each end. he estimates $25,000 in fix up. i’m not handy so i would use independent contractors to do the work.
the duplex is in foreclosure and the owner is in chapter 13. the foreclosure sale will be in around 3 weeks.
it will take $22,000 to get it out of foreclosure (i have the cash thanks to a recent deal). the payoff amount is $180,000. fmv after repairs is $275,000 to $290,000.
the seller wants $250,000 but is very flexible due to the foreclosure.
i might be able to get it for $210,000 to $215,000 (counting the $22,000 to get it out of foreclosure).
is it possible to structure this deal so that after commissions and closing costs on both the purchase and the sale to a buyer i’ll find (investment properties here are selling with multiple offers inside of a month) i can make some money? to be worth it for me, i need to walk away with $15,000 to $20,000.
i can get a 90 day close once i pull it out of foreclosure. the note on the current loan is $1640 a month. there is a due on sale clause, but my realtor tells me that i’ll have 4 to 6 months before the lender becomes aware of a transfer of title if at all as long as payments are made on time.
before looking at it, he thought that i should pay the foreclosure money, put it in my name, rehab it and then sell it for the fmv. after looking at the extensive work that needs to be done, he’s not so sure.
i have the $25,000 for repairs and the money to keep the mortgage current during repairs. i’d prefer not to keep all of my cash tied up in one deal though.
i’m sure that the seller will take a note for her equity.
i’d like to flip it, not buy and hold. for an investor, the 4/1 would rent for $1300. the 2/1 $900.
how would you work this deal? should i take it or walk away?
if i want this, i need to move fast. i have to make an offer by this monday, 4 days away.
can anybody help???