Posted by Nate on March 19, 2001 at 23:01:30:
Chris,
Just curious…what exactly did you see when “driving by” (I assume that means you did not go inside) to dissuade you from pursuing it further?
NT
need help with my first deal - Posted by Chris
Posted by Chris on March 18, 2001 at 12:47:35:
I called on an add that said motivated seller. He has a house up for $124,900. He says he needs all cash at closing to put towards another property. He has owned it one year. He was renting it for 1350.00 but it is now vacant. He bought it and rehabbed it. I totally forgot to ask what he had left to pay on the existing mortgage. I would like to come at him with a few ideas/offers. I did mention a lease/option and he said that he would consider it. How do I make either of these offer situations work?? I asked what would be his lowest price possible for all cash if closed quickly and his reply was make an offer. Now obviously I do not have any cash but have good credit. Any ideas on how to flip this or set up a lease option offer would be appreciated. Oh yes! Comps in this area are from 130-140k. Thanx, Chris
Re: need help with my first deal - Posted by Tiffany (MA)
Posted by Tiffany (MA) on March 19, 2001 at 14:32:56:
I’ve found sites like domainia.com helpful when looking at deals where the seller has purchased in the last 13 years. You type in the address of the property and it tells you the date of purchase and price paid. I have that number in my head so I can have an idea as to how much they owe and how much profit they’re trying to pull out. That way I have the info they many times don’t want to give up. Also is good for comps if you find addresses of props that are similar to the one you’re looking at. Hope that eases the elusiveness.
–Tiff
Re: need help with my first deal - Posted by Ed Garcia
Posted by Ed Garcia on March 19, 2001 at 11:06:47:
Chris,
My first suggestion is for you to go to the “How-to Articles” and find an article I wrote, “Making Money When You Buy”, you’ll find it at http://www.creonline.com/art-151.html. That is at least one-way of analyzing a deal.
Scott’s, right, you should have a game plan when you buy a property. It should include a plan A, B, and even a C. Chris, right now I don’t see a deal. You might prove me wrong when you find out some basic information. (1) What are the market rents in the area? (2) What is the vacancy factor on residences? (3) What’s owed against it? (4) He bought it just over a year ago, what did he pay for it? (5) Is there any differed maintenance or fix up to be done, and if so what will it cost? If there is a deal here, it could be a quick flip or a lease/option. I wouldn’t put a new loan on it at the numbers that you given.
If you want to get more info and get back to us, you’re more than welcome.
Ed Garcia
Re: need help with my first deal - Posted by Scott M.
Posted by Scott M. on March 18, 2001 at 22:11:05:
Chris,
I’m still just starting out myself and am in the process of nailing down my first property. But I have a few thoughts I’ll share with you.
Before you start making any offers, you first need a plan. Do you want to flip it for a cash profit or rent it out? If he’s only owned the property a year, flipping doesn’t sound like the way to go. Not enough profit to be made. That leaves finding renters. In which case, you need to know if you’re going to make a profit, break even, or lose money each month.
If he was renting the property out for $1,350.00, you may want to ask how many tenants he’s had in the property during the last year. And how many months it was vacant. You need to know what you can expect the utilities (water, electricity, gas) will cost you or if the tenant pays them. If it’s a single family home, the tenant is probably paying them but you need to find out for sure. You need to also factor in vacancy, RE Taxes, Insurance, Repairs/maintenance costs for the year.
Basically, until you know what you can expect all your expenses to be, what you can expect your mortgage payment to be, and what kind of rents you can realistically expect to get for that house in that area, you cannot really come up with a plan. And if, on top of all other expenses and your mortgage payment, the seller agrees to carry a second mortgage, it could really be a money drain. You could end up in dire financial trouble before your investing career has really begun.
Gather more information, if you haven’t already done so that way you can take an informed look and what options make sense. If I’m wrong about any of this, I hope someone corrects it. As I said, I’m still learning myself.
Best of Luck,
Scott M.
Re: need help with my first deal - Posted by Chris
Posted by Chris on March 19, 2001 at 18:17:21:
Thanx for all the responses. I drove by the property today. I would not even do a lease option on the place. No room for a quick flip either. Chris