Potential Deal...Need Some advice!!!

Well first good job on going out there and calling to find deals. Most importantly do your homework and find comps. If he bought for 198k and it comps 190-220k there isn't to much room there. But you just need to find out the facts first. Find out what its worth, go look at it and see if it needs repairs then go from there!!

Goodluck!!
Shaun

you also have to find out what's the remaining balance on his loan - is there more than one mortgage on the property? is this a single family? multi? what is the market rent in the area? find out comps on your own with a realtor in the area. zillow is good to give you a ballpark, but a realtor can give you more accurate comp information with MLS.
Those are just a few of the questions you have to ask to qualify this deal.
Good luck

Shaun and Nick have great suggestions to take into consideration and follow through with. You definitely want to do your homework. But don't forget to build rapport. Don't go in there like it's a lion on the hunt, go in as a friend who wants to help another friend get out of a bad situation. If they want to get as close to fair market value as possible don't disgard that option. Ask if they'd finance it in that case, giving you six months to find financing (end buyer). NEVER walk away from a potential deal, even if it doesn't happen today. He may decice to go through the realtor to get a higher price, with no success, and call you at a later date because it wouldn't sell. Why? Because he trusted you, that's key!

Best of luck to you,

Feels good....Dosen't it? It sort of feels like your fishing in a lake and you just got a HUGE BITE! but, the fish isn't snagged on your hook.....YET.

Here's my feel of the whole situation, seems to me you have a "CURIOUS SEMI MOTIVATED" SELLER, i'm just NOT so sure you have the type of MOTIVATED SELLER that you need. See, a TON of seller's are going to say "well drive by the property and make me an OFFER" And that's fine and all "IF" you have unlimited funds for gas, time, etc. But as your time becomes more valuable(because you are generating more leads, thus your business is growing) you have to find a way to "PRE-SCREEN" your seller's better. This seller you have "thinks" you can save him money, cause he dosen't have to pay you a commission, but in reality you need to buy that property for at least 70% of ARV or less to profit, as a WHOLESALER. It's your job to find out what's the LEAST AMOUNT of MONEY he'll take for the property, he already has an idea of what the properties worth, believe me. Now it's a matter of what he's WILLING to take and you can find this out right over the phone, the LAST thing you want to do is WASTE your time AND his, while trying to see if you and the seller are even on the "same page", for this property i would figure $5,000 in REHAB costs, then adjust that number if needed, this is "ALL PLEMINARY" or "subject to you seeing the property". Now, if you and the seller are CLOSE in numbers, then go look at it, and then you can give him an EXACT OFFER.

See, some seller's really think that even in dealing with an Investor, they should get RETAIL for thier property and NO LESS! Those seller's, Are NOT MOTIVATED enough to work with you, here's an example: I recieved an E-Mail yesterday, here's what it "basically" said, "Joe, Hi, my name is BLAH, BLAH and i am looking to sell a property that belonged to my mother, however there was a horrific accident and a fire broke out damaging the rear of the house, killing my mother, i can NO Longer go near the property and just want it SOLD! It needs approx $31,000 in REHAB, if interested E-Mail me back ,thanks"

Horrible Story, i know. If you had ANY idea of how BAD i felt for this women and wanted to HELP her get out of this situation, man. Theirs 2 lessons here, #1 This would seem like it qualifies to be the type of MOTIVATED SELLER that were looking for. #2 This was HARD, Because of the Tragic story and the emotion that i felt, i ALMOST didn't care about profit any more and just wanted to HELP her, But you have to remember, this is a BUSINESS and it's gotta be a Win/Win situation for both parties involved.

So, here's what happened: I Emailed her back stating i would love to HELP her, i then did my FACT FINDING, gathering info like, Loans(if any), Also asked her How she came up with the figure of $31,000 for the REHAB, got the ADDRESS, etc. After evaluating COMPS i had an idea of what i was willing to pay, so i asked her: "Whats the Least you would take for an ALL CASH Deal?"
She E-Mails me back stating she "JUST" wants the APPRAISAL AMOUNT minus REHAB COSTS, I said to myself, What?!?! Is she CRAZY!?!!? She then went on to tell me(through E-Mail) that another Investor had given her an offer but she DECLINED, because she basically wants RETAIL for her property. Now Obviously I can't HELP her, but did you see how this looked like a "PROMISING MOTIVATED" SELLER? This example is the EXACT reason why you NEED to "PRE-SCREEN" your SELLERS. Needless to say, i told her that if for ANY reason No one would give her what she wanted, i would still be glad to do business with her and to keep in touch. CLASS DISMISSED, SULLY

Thanks for the advice. I will make sure that I do my homework. Also, thanks for the questions to consider. I will be speaking to him again on Sat. and will inform you.

Appreciate You Both!

I promise not to approach the owner like a lion. LOL! I do understand the importance of building rapport. I thank you for restating that to me. The way you put makes a lot of sense. Becuase, like you said if it doesn't happen and the property doesn't sell with the realtor, he just might come back. The more I learn from you and others on here, the more I am starting to understand the way to approach it. Thank You!

Say if he did say "yes" to financing the property. Then we worked out the terms and price, should my exit strategy be more towards renting the property or lease-option?

Wayne

That was definitely a session to remember. I learned a lot of valuable information from your post. You know what those little bits on the line do feel good, but a little frustrating at the same time. I'm sure that I will hook one soon.

The example you gave with the young lady must of had your emotions up for a while. That is a tragedy and I do feel for her. But like you said this is a Business. Just what rich dad (R.Kiyosaki) preaches: 'Use your emotions to think, not think with your emotions'.

Through your example, I now understand the importance of Pre-Screening prospective sellers. I used to think that I was doing a good job. But now I know I need to tweek somethings. I feel like I wasted a lot of time. Can't get that back so onward we go. Do you have any suggestions on how to prescreen sellers a better? How can I enhance this part of my business?

I do appreciate the example that you have given. It opened my eyes and mind up to something that I wasn't quite getting. I gave me a better sense of being calm, persistent, and patient.

Thanks Sully,

Wayne

If you would like some guidance on this subject, just look up my Forum Topic: Determining who's a MOTIVATED Seller and who Isn't, that should give you a deeper look on PRE-SCREENING SELLERS, SULLY

A lease option is what I prefer, because you have less tenant problems. I personally don't like being a landlord, but that's just me.

I will TOTALLY AGREE with that Notion, i'm also NOT a huge fan of being a Landlord, plus theirs just too many benefits of Lease Options vs Renting, SULLY

THANKS FOR THE HEADS UP! I WAS ACTUALLY WAYING BOTH SIDES AND YOU GUYS ARE RIGHT. LEASE OPTIONS ARE BETTER.

WAYNE

I love this story it was a sad story at first then the twist came at the end where you were like "WTF, Aprraisal Amount?! You Crazy girl!" I did get what you were saying though seeming to be a promising motivated seller. Thanks Sully for making my day. I am new here and Ive visited your page and find you to be a very knowledgable helpful go-getter. I will soon contact you for any help if thats okay?

hope you have a great day,

Ron