What do you all think? My First Deal -- LONG - Posted by Judy

Posted by Judy on April 24, 2000 at 09:33:47:

Just one question,

How would I come up with the $68,500 cash?

Judy

What do you all think? My First Deal – LONG - Posted by Judy

Posted by Judy on April 22, 2000 at 24:29:14:

I had a realtor call on my “I Buy Houses” ad.

He has a 4BR/2-1/2BA 1 family house that needs 10,000- $15,000 worth of work (Roof leaks, siding needs redoing, and the rest is cosmetic – he had gotten three different estimates). He told me that identical houses on either side of this house recently sold for $125,000 and $130,000.

The realtor says that the owner is a family corporation (in business for 15 years, which brought a bunch of houses in a package deal, and this was one of the homes). They don’t feel like fixing it up. Supposedly, the home had been listed, but when people come to look at it, they would say it was ugly and didn’t want to consider it. Realtor also said that they might hold a mortgage.

I know that I have to get my own contractor to look at it; but assuming that the comps are correct and that the contractor gives me an equivalent estimate, I’m thinking this home might be good for a retail flip.

I was thinking of offering $90,000 with $45,000 from a hard money lender, and a $45,000 second. Payment on the second to begin six months after closing. I would then retail the house for $100,000. What do you guys think?

Re: What do you all think? My First Deal – LONG - Posted by phil fernandez

Posted by phil fernandez on April 22, 2000 at 08:59:50:

Judy,

I would first nail down the rehab costs by getting three contractors out there to look over the property. Then I would run my own comparables to see what the house would fetch fixed up. Without these two numbers its hard to figure out what to offer.

Here’s what I do, and for illustration purposes I’ll plug in some numbers.

FMV $125,000

  • repairs 20,000
  • holding 10,000
  • cushion 10,000
  • profit 20,000

offer $65,000

Back you’re way out to reach what you can possibly pay for the house. Hmmm my $65,000 offer looks pretty close to David’s offer #1.

Re: What do you all think? My First Deal – LONG - Posted by David Alexander

Posted by David Alexander on April 22, 2000 at 06:05:54:

Close but, I think your offering a hair to much.

Hmm, without talking to them I’d offer these three deals.

Offer 1. 68,500k All Cash
(That’s simply 70% minus repairs.)

Offer 2. 80k 40,000 Cash Now, 40,000 Cash 2 years (min)
(dont mention interest or payments)

Offer 3. 89k With 5k down and he carries 84k.
(this is where strong negotiations are needed, to find out his needs and seperate them from his wants, never start off offering any payments, interest, or term, let that be part of the negotiation to be worked out)