New Guy - Deal? Flip? Or Walk Away? - Posted by Larry
Posted by Larry on June 28, 2002 at 09:39:15:
I would appreciate your help determining if there is a deal I can do here.
My current business model is to buy-rehab-resell. AND I am an aspiring RE investor (a newbie, new guy, whatever), and am (still) actively working toward my 1st deal.
A seller found me through my B. Signs with a rural rental property. He contacted me before and without talking to any realtors.
The seller, who is elderly, has refinanced the property a great deal, recently, I think to repay medical bills, so its mortgaged to the hilt; $129,000, $1,077/mo., Jan 2001; the 4th refinance since ?97. The original mortgage was $51,000 in 1985.
Its a 2.75 acre parcel with an old frame house (1910) that?s rented to his 2 grandsons for about $550 ea. One tenant wants to stay, but the owner told me he would “just like to get rid of it” (his words), because he can?t make the monthly mortgage when the 2nd grandson(tenant) moves out in August. He also stated that he just “needs enough to payoff the mortgage”. He?s motivated (I think), but I?m struggling to find a deal here that I can make work.
The property site is in Washington County, western Maryland, near Sharpsburg and its Civil War battlefield tourist areas. Only about a ½ acre is in use for the house, yard, etc.
Comps suggest that the FMV may around $110,000 - $135,000. Newer homes and renovated period homes are going for 2 and 3 times that.
My first question is this: Since this does not fit my plan, and I presently do not have the REI where-with-all and capital to pursue developing it, is this a candidate to flip? Because of the large mortgage, I?m stumped how this can be win-win for me, the seller, or the flippee.
If I could, I envision the unused area of the parcel, to be developed with a new house, after clearing the trash, trailer, and brush, etc. Or, similar scenarios, like razing the old house, and using the whole parcel. Nearby parcels have been similarly developed, and there are many new, micro-estate type properties in the immediate vicinity.
My second question is this: Is there another way to make a deal ? Again, because of the large mortgage, I?m blind to other possibilities.
OR ? Is this a walk-away ?