OfflineHello DG Family,
I need a little help on a deal that I think just fell into my lap. I was looking through the local paper and found a buyer, I called him and asked what kind of properties he were looking for and he told me, well while asking further questions to get a little more information from him, he began to really talk and tell me about other properties that he had, one that was too far from the area he lived and purchase houses in, this house is very nice in a nice neighborhood and he wants to sell because the location of the house is too far from him and the house is ARV $198.000, however he only want to make 120k from it, he asked me if I was going to resale the house I was honest and told him yes, he said he didn't want me to do that because he only wanted to allow me to make a few dollars in the deal to get me going.
I thought that was VERY nice of him, so I told him I wouldn't resale it, he said if I wanted to purchase for my self then he will give it to me at a discounted price, (the only thing with this is he is very experienced in Real Estate and he would see the contract the says Assign to etc.) so I decided to stay away from that, and decided to find him a seller and get a bird dog fee.
Can anyone help me on how they would have handled that, and should I have handled it another way? What was the right way to handle this deal?
Any help would be appreciated?
Thanks,
Shelby
Here are a couple of things I would do.
1. Determine ARV by pulling comps in the area that have sold in the last 90 days. Fixed up ones, not REOs or short sales. Look at currently listed and under contract comps.
2. See the house and determine the rehab/remodel needed.
3. Make an offer to purchase based on the numbers.
4. Have your cash buyer in place.
5. Make sure the seller is happy with the purchase price. What you do from there is none of his concern as long as you CLOSE. If you make a $10,000 fee and the seller gets what he wants what difference does it make? Other than the seller is greedy and he wants all the money himself.
Usually on deals like this from a fellow investor the property needs a lot of work and the ARV is lower than stated. It could very well be the property is only worth $120,000 or LESS. You must find out yourself, NEVER take a sellers word for what a property is worth. Tell him you might do it yourself or you might turn the deal over to one of your fellow investors. Either way you are doing this deal to make money. If he does not want to do this, tell him thanks and move on to the next deal.
Good Luck!
Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
Hi Michael:
Thank you so much, I will do exactly that. I really appreciate your help.
Thanks,
Shelby
Don't quote me on this... but I think this is how it works.
If you were to buy and hold, you could purchase the property with a private money lender since a bank most likely wouldn't finance something like that. Then once you get the property and fix it up you cash out refi with a local bank that will do those. you pay off the PML and then you own the property with a normal loan.
To pay the loan you would rent/lease to own the property. You make rental income and then a lump sum off of selling.
There are a lot of details left out, and I have 0 experience doing that. But it's a thought you might want to look into.
Glen
"The man who acquires the ability to take full possession of his own mind may take possession of anything else to which he is justly entitled."
-Andrew Carnegie
"Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning."
– Mahatma Gandhi
Hi Glen
I will look into it..
Appreciate it.
Shelby