Need Advice - Posted by Todd K

Posted by jeff on July 17, 2002 at 16:05:10:

if flippnig is your game, then the risk is all but gone. but donig L/O and things like your post said has risk, especially when your doing it with 200K homes. if you dont have to hold it then your good to go. but if you plan on staying in the deal like you aluded to then theres not alot of room to play here.

the house is probably in immaculate condition, but i have looked at more houses than i care to mention and i have yet to see one, even the immaculate ones that need NOTHING. the fresh rehabbers would be the onle ones that i could imagine that need nothing, and thats only if the work was done correctly. once there is someone living in the place, work is always required. the switch plates are usually dirty, the pain on the walls are usually finger printed, smoe of the woodwork has usually seen better days, the doorknobs are dull, etc. even the great, expensive houses have these problems normally.

back to that 30K in equity they would like, id like to have 100K in equity myself, but it dont always happen. what they want is of no concern to you, what you need to focus on is what they NEED. mi sure theyd like full price, but make it clear that it aint gonna happen and find out what it actually takes to get them out of this problem and on with their lives. if they nitend on leaving you with nothing to gain, then why would you get involved. investors cant go around solvnig people problems out of the goodness of their heart, if they want to take all the money out of the deal, then they need to find a retail buyer. if they want uot quick then thats where you come in. if they are not having a problem then they are not the type of people you want to deal with anyway. gop with the flip here, it appears to me to be your only profitable situation if they require their 30K. other than that, id tell them to call me when they decide they want to sale their house until then, you got other deals on the line you need to tend to.

it appears to me they dont have problems, i try not to even get involved in properies that are for sale unless theres a good motivational problem in the background. their divorce is a problem yes, but it dont seem to be a big enuogh problem yet to get them gonig, they are trying to get all they can, retailers are their needs for now, give it a few months and see how they feel after a few more payments come due.

Need Advice - Posted by Todd K

Posted by Todd K on July 16, 2002 at 13:06:26:

I am new to REI. I talked to a lady that I was going to do a Lease’Option with. They need cash. Asking 219K. Owe 177K. I asked what they would need if I could offer cash. She said they were hoping to get 30K equity. Should I try to put a contract on the house for 200K and flip it? Any suggestions? What I would really like to do is have the money to buy it and then lease option it out. Any suggestions on this avenue??
Thank YOu

Re: Need Advice - Posted by jeff

Posted by jeff on July 16, 2002 at 16:34:50:

your telling me they have 30K equity and your thinking abuot giving it to them? NOT! if they want their equity they can list it with a realtor and wait til noone buys it, then call yuo back and give you some of that 30K. if you put a 207K contract on it, which is pay-off plus 30K, you only have 12K left for profit. byt the time you fix up the small things (ALL properties need small things) and hold it while you do this, market the property and pay a realtor if this is in your plans, you now have negative money in your pocket. have you tried to buy bread with negative money? Wal-Mart didnt take negative money last time i was there. you need to get them away from that 30K they are trying to hang onto. if you give that to them, you are now losing. and trust me no this one, a 200K house is not a place to lose money, that creates a DEEEEEEP hole in the pocket. try to get them to take the L/O or maybe do a subject to on the place and maybe give htem smoe of that 30K, but never give them all of it. if 30K is their starting point, tell them you was thinking more along the lines of 10K and see what they say. they wont accept it, but they will realize if they intend on selling it, they will have to turn lose of their 30K or atleast some of it.

but actually thats only 32K equity you have if they accept the 10K, on a 200K property, 32K is not that good unlss you can flip it or get in for free with no liability. theres too much risk ion a 200K house to settle for the 32K equity which is gonna be more like 10K after you get it resold unless you got a quick flip lined up.

Re: Need Advice - Posted by ToddK

Posted by ToddK on July 16, 2002 at 19:18:31:

No, I am telling you that they would like 30,000 in equity out of it. They have more than that in it. They are getting a divorce and both need a down on another house. My question is - assuming they would take 190 or 200K, is it worth my time to try to flip it?? (They are not going to Subject To - they have no need to) First of all, it definately does not need work. Second, I do not plan on buying it with my own money and sitting on it for 6mo’s. Isn’t that the whole idea of flipping?? I would put in under contract for say $100 earnest money, get as late of a closing date as possible and try to assign the contract for a few thousand. I don’t know why your getting all worked up about the idea of negative money and holding the property while my bank account is drained - that is obviously not the way the deal would be set up. I would have an inspection clause or something in order to get out, and therefore my only “Risk” would be my $100.00 earnest money. Am I missing something here? I definately am not an expert in this area - hence the reason for the question, but I do not see all the risk you seem to see. Maybe I have missed something?? Please tell me if so.