Posted by Shawn_Ma on July 04, 2002 at 12:09:43:
Thank’s for your suggestions and encouragement. This will be my first deal and I’m gonna do the option for quick and easy cash. If seller doesn’t go for the option…I’ll put it under contract and wholesale it if the seller and I come up to favorable terms.
Shawn
newbie:possible assignment of contract - Posted by Shawn_Ma
Posted by Shawn_Ma on July 03, 2002 at 10:09:09:
Thanks in advance to any suggestion’s from the pro’s!
Here is the deal. Home is not in a great location as far as the part of town goes, but it is a good town and not crime ridden or anything like that. After repaired, in excellent condition home could sell for anywhere from $72,500 to $80,000 according to my own comps of recent previous home sales, style house, and location. The owner is not very motivated in that, I’m sure he picked up the house for cheap, cheap. Not sure exactly how much he paid. His asking price is $25,000. Owner’s brother lives next door to the house and has said that he’s going to buy it for like 3 years now and probably will never do it. The inside of the place is gutted and will need to be completely rehabbed. I figure the cost of materials, along with subbing out plumbing and electrical to be at about $40,000, so I do not want to get into a rehab job on this house, as I would be working on it myself for 3 months for free, way to skinny. I will be inspecting the place on Saturday to confirm my estimations on repair.
Now, just yesterday, I received a call from a guy,(a plumber) who is looking for a fixer upper, the more fixing it needs he says, the better. He says he has $10,000 to $15,000 to put down in cash on a property between $30,000 to $80,000. When he called, he asked about leasing with the option to buy, so my feeling is that he has either poor credit or feels as though he has poor credit, I will have to find out more about this. My feeling is that the number’s won’t work for a rehabber, because they really don’t work for me… but for a plumber who is renting at present and wants to live in it…it may be a good deal as long as he is licensed. Homes for $25,000 to $30,000 are scarce around here no matter what condition they’re in.
So, after I check the house out on Saturday and confirm the amount of repair necessary, I am thinking I will call the potential buyer and ask him some more questions, such as, if I found a house for $25,000 or less and negotiated the lowest possible price, and put it under contract, how much would he be willing to pay for the assignment of the contract? I am also going to ask if he has credit problems and if he does…find out what they are and maybe steer him towards a mortgage broker or two or three. My feeling is, is that if he plans on living there and put’s down $10,000 he should qualify for at least some kind of construction loan or something similar. Any suggestions are greatly appreciated.
Flip it - Posted by Juan
Posted by Juan on July 05, 2002 at 13:59:33:
Shawn,
Tie it up under contract and flip it to this plumber and have him use a hard money lender if he does not have all the cash.
Banks might not lend him the money due to the condition of the property. Banks like houses that are liveable. A mortgage broker would be a good person to speak to.
Juan
Flip it and get outta there. Good Luck!! (nt) - Posted by RJ-MA
Posted by RJ-MA on July 03, 2002 at 21:16:21:
nt
Re: newbie:possible assignment of option, actually - Posted by Shawn_Ma
Posted by Shawn_Ma on July 03, 2002 at 10:41:24:
Actually, I am now thinking it would be better to tie the property up with a three to six month option, record it and then assign the option.
Thank’s for the input! Hope you’re doing well! NT - Posted by Shawn_Ma
Posted by Shawn_Ma on July 04, 2002 at 12:03:17:
NT
Re: newbie:possible assignment of option, actually - Posted by jeff
Posted by jeff on July 03, 2002 at 20:01:22:
if he buys the place and does the work himself, he is not required to be licensed. if he L/O the place from you and does the work to YOUR place, then go for the license, never allow unlicensed people to do utility, mechanical, or structural work to any of your houses. also in your L/O make sure you have provisions covering these new additions he will be adding.
as far as brokers go and their requirements, people need one of two things. either they have MONEY or CREDIT. both is preferred, but not required (to a point). with 40% down as in this case, he shouldnt have any troubles there. the wall i hit with these deals seems to be the loan minimum you run into with brokers. 40K is the lowest i have ever seen one go. youll have to do convetional loans for the smaller numbers whcih require better credit and more down, but i think with this much down, he wont have much of a problem there either unless he just totally has ZERO credit capabilities at all.
this sounds like a nice deal your onto here, im sure you can mkae it work, its got potential.
if your confused abuot the entire thing, and it sounds like you are, the option is yuor best shot if you can get the seller to agree.
good luck, i think you got a hot one here.