Posted by Craig (IL) on February 17, 2002 at 12:04:57:
If the owner has been waiting a year its because he’s not really motivated, just waiting for the right offer to come around, or he is very motivated getting nervous because the property hasn’t sold. In either case, you could check this out–it wouldn’t hurt to make an offer. You may be able to offer the seller something if you have skill with rehabbing and/or skill with managment. First, though, you have some things to think about and some questions to answer.
Consider these: 1) One bedroom units will forever have higher turnover rates with means more work for you and longer vacancy periods. (2) based on the price you stated this sounds like a low end property; low end properties attract low end clients, more problems collecting rents, runaway tenants, drug use, higher crime, tenants trashing their units, etc. Are you sure you want into this? 3. Your income figure is off; you need to do due diligence. First, make sure you know the going rental rate, and then figure no more than 75% of that as income. You need some room to cover unexpected costs. Also, check the title, zoning, and other local laws governing rentals.
Once you’ve done all this, and if you are sitll interested, you could offer to purchase it on a CFD/ Land Contract wtih him financing the entire pruchase price. Offer no money up front. Instead, offer to do the rehab work up front in lieu of a down payment. The purchase price shoud be no more than the FMV less rehab costs. Also, write the note so that monthly payments are deferred until after a reasonable time to compete the rehab.
Posted by errol foy on February 16, 2002 at 22:55:54:
iam new to this but know this is a great deal waiting to be had. there is this eight plex one bedroom each, complex that has been for sale for about a year in the area i work in. the seller is asking 53k. it needs rehab, which i est. to be about 10 to 15k. after rehab it could bring in about 2800 month in rental revnue, with a possible note of only about 600.00. I know the seller would take less, but I have no money to put down and do not think i could get a loan without any money, someone please help.
Posted by Paul S on February 17, 2002 at 15:13:55:
Have you talked to the seller? You need to find out why the seller is selling the property. This business is like every other- it’s about meeting the needs of people. You are in effect the seller- selling to the seller a solution to his/her problem. You need to find out if the seller is open to taking back financing? Find out if the seller would allow you to do the rehab as a down-payment. Here’s how it would work- You do the rehab work (or have it done) and the seller pays you to do it. You then pay the seller right back. For example- you get a check for $1,000 and you pay the seller $1,000 right back. Keep good records (your cancelled checks & bank statements) to show a lender that you have in effect made a down payment. Better yet, you can show the incoming checks as earnings from a “part time business” and boost your earnings to the bank. You just gotta think. There’s a way to do any deal.