OfflineWe have a couple deals working and I'm wanting someone experienced to check our offers and our math. The first problem with the 2 deals we found from our bandit signs is that we don't have buyers in those areas. The signs they saw were in the part of town we were trying to score deals in. Anyway, here are the specs:
1st deal is a lady who is too old to care for her home. She is mostly moved out, but still have stuff in her house. I believe she can't afford the house based on the information she gave me, and it's possible that she might be close to foreclosure. Here it goes:
Asking $40,000 but negotiable
owes $35,500, will take payoff
ARV is $57,400
house needs new flooring, paint, and had the central air/heat stolen from it.
3 bed, 1 bath, 889 sq feet
rents in that area is $650
What would Matt Larson do?
2nd deal is a landlord who is exhausted and doesn't want the rental anymore...
Asking $90,000 (negotiable)
don't know payoff, but she is not willing to settle for payoff.
ARV is $103,000
rent in this area is $1050
house is move in ready except carpet needs cleaning and is only a year old. Owner has done a LOT of work on the house, central heat/air is new, ceramic tile is new, ect.ect.
4 bed, 2 bath 1254sq ft
What would Andrea Weule do?
Anyway, let me know if anyone has any additional questions or what your opinion is on what we should do/offer?
pick the low hanging fruit and focus on the 1st deal. If the central a/c unit was really stolen, have her call her insurance company for a claim. Do a lease/option or a "subject to" and get that property in your portfolio. The 2nd deal will probably be a waste of time as he isn't motivated and the spread (asking price vs. ARV) isn't wide enough.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
This is our first deal we are working and I'm not that knowledgable on least/options or "subject to" deals, so I will have to do some research on that or those options. Do you happen to have an easy reference for me to read up on? Thanks for taking the time to respond. -Susan
is to search for those terms in the search box under Dean's head above. Write in your term(s) and hit ENTER
Always Looking to Acquire Houses | Always Looking to Amaze Investors
You need an exact estimate of repair costs on each property. How did you establish your ARVs? Through sold, listed and under contract comps? Are these places rented, tenants in place? How long are the leases?
Both Matt and Andrea (I have seen Chip and Andrea's)have specific criteria concerning percentage of ARV, cap rate, cash on cash returns and monthly cash flow. And of course, location. If the properties don't hit their requirements they move quickly to the next.
You have not provided enough information to make a decision based on the numbers. You did say you have no buyers, that can be a problem!
Just on the surface, number 1 looks like a good cash deal. If you can get either seller to owner carry or a lease purchase option that might work.
Deal 1 sounds like the rehab/ remodel costs would bring the purchase price up considerably. It actually looks like the better deal of the two. Deal 2 is at 87% of ARV plus clean up/ repairs.
Get FIRM numbers (accepted offers) on both properties. How can we evaluate a deal when the buy price is "negotiable"? Get exact repair/cleaning/remodel estimates. You are not ready to make an offer. Do your due diligence. Any back taxes owed? Any structural issues etc etc.
Post your HARD numbers when you are done and we will evaluate with you!
Michael Mangham
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
Thanks for the insight. I don't have all the numbers on repairs yet because I like to find out first if the numbers are going to be close enough to make a deal. I use their idea of what needs to be repaired and if they misrepresent what needs to be repaired, then I will either renegotiate, or the deal will be off. Once we think there is a deal to be made, then we will get the repair estimates and such. I got a few private messages and a couple other responses where I posted this on another thread that I know have more clarity on how to proceed. -Susan