OfflineSo I was calling For Rent Ads in the local paper to build my buyers list tonight and came across something that I feel I really need to act on quickly.
After calling a particular Ad I talked to an older guy that said he really didn't want to have to rent out this house anymore because he has some health issues. In fact he said he has 2 other houses in the same area that he would also want to sell. He said that he has owned them for quite some time now and has always used them for rental income. Of course I was a bit stunned to hear him talk about selling since I am rather new to all this and what not. He basically told me to make him an offer if I was interested. I then told him I would talk to him after I had a chance to look into the numbers and everything.
Now I have never done a deal as I am just getting started with this. I have only a small amount of cash buyers that I have built up so far and have never tested their value to me yet. I know I want to strike on this to try and close a deal even though I wasn't quite ready to yet.
Here is what I plan on doing next:
1. Checking out comps in the area
2. Asking him how much if any is owed on the house/houses (my guess is NONE)
3. Physically looking at the property
4. Making him an offer based off of any repairs needed and comps sold
5. Blasting the deal to my buyers and craigslist
I really need some guidance on this situation since this came a lot sooner than I was expecting. I really appreciate any input or advice someone could give me on how to approach this.
If at all possible, you always want the other guy to put out a starting number. But have your comps ready so that you know if his numbers are on target. But he may have no clue what the properties are worth, so you may have to be the one to put some numbers out there.
Also, be sure to ask if he will do terms and have some ideas ready if he is agreeable and asks what you have in mind. If he will do terms, you can pay him a higher price and make it a better win-win for the two of you.
You could actually have several scenarios prepared (three is good). Show him the options and ask, "Which one of these works best for you?" Then, CLOSE YOUR MOUTH and DO NOT SPEAK. He who speaks first, loses!
Best of luck! Sounds like you have a very motivated seller! Go for it!
Karen
"You're never too old to be what you were meant to be!"
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Karen I really appreciate your response to this. When you say terms I get in general what you mean but I was wondering if you could elaborate on that a little if you could please. What terms are common to ask for on both ends? Obviously you know I have never done this before.
Thanks!
Nick
Karen I really appreciate your response to this. When you say terms I get in general what you mean but I was wondering if you could elaborate on that a little if you could please. What terms are common to ask for on both ends? Obviously you know I have never done this before.
Thanks!
Nick
I am not as proficient at being creative at terms as some others such as Michael Mangham and Mike (reinvestor42). They are the big experts for that advice.
Have your comps already worked out for each property.
One offer could be if you pay cash and you would offer 70% ARV (after repair value) minus repair costs, minus what you would want as an assignment fee (don't be greedy, many new investors fall into that trap)
If he is willing to do owner financing, just see how long he will go (get as long as you can) and what percentage you can negotiate. Right now, he is not going to be making much of anything in a savings acct (probably <1%).
If he doesn't want to finance for a long period of time, you could suggest a Lease Option. Maybe he would do that for
3-5 years, you could find a Tenant/Buyer and they would have to be able to qualify for a loan to pay him out before the option period was over.
You could also have a period where you are making smaller payment and a balloon pmt at the end of ___ years.
Make sure that you make your contract assignable and make him aware that you are an investor and may be qualifying someone else and assigning it to them or renting the property out yourself for cash flow could be an option if you do deal #2.
These are just some thoughts to start with. Just get creative. Think outside the box. Anything is negotiable.
There are some very creative people on here. Hopefully, some of them will share their ideas.
Just make sure that whatever way that you decide to go, that you have good CYA contracts and that you make it a win-win situation for all parties concerned.
Best of luck to you.
Karen
"You're never too old to be what you were meant to be!"
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"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
This is great advise Karen thank you much
I am determined dedicated and will make it in real estate thanks Dean
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Be careful about researching comparable properties. You should go by what properties have actually sold for, not what they are priced at in the same neighborhood as the houses around it might be over or under priced. The only value that truly matters is the value that a buyer puts on a property, including yourself.
Karen, kinda' eluded to the value the seller, the landlord who's liquidating the properties, puts on the properties, but that could also be high.
If you promise to list the properties for sale with the realtor on the back end, they may be willing to do comps for you for free on the front end. They're likely going to want to know that your buyer is serious and qualified just as they'll want to know that your seller is ready, willing and able.
You might want to hurry. If this guy is really wanting to liquidate, he could hire a realtor instead of you at anytime. He may be doing it right now, for all you know. If he does, don't let it get to you too much. One of the things I've done wrong in my real estate career is let it really get me down when a deal goes South. In stead, what I should do is let it go and immediately start working on my next deal...and I mean immediately, like within a few minutes or within the hour.
Rick Allison, Realtor
Amarillo, Texas USA
Find comps, private lenders and cash buyers nationwide: www.TheRealEstate.PRO
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"Karen, kinda' eluded to the value the seller, the landlord who's liquidating the properties, puts on the properties, but that could also be high." Sorry, but I don't agree that I eluded to this at all.
This is EXACTLY what I said: "If at all possible, you always want the other guy to put out a starting number. But have your comps ready so that you know if his numbers are on target. But he may have no clue what the properties are worth, so you may have to be the one to put some numbers out there."
But, I do agree that time is of the essence.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
Hi Nick,
You can also try to make a bulk offer. Meaning, that you look at the whole picture vs each property on its own. Say instead of offering X for this and X for that, you would just offer a total for all three.( make sure to run your numbers and know your MAO).
Just a though for you. Always nice to have options!
Thanks for the advice Rick and Karen, I appreciate it!!
Christine
Christine
You already know his why, get comps on comparable houses that sold in the area over the last 6 months to a yr. That will give you a round about estimate of the homes worth. Since they are rentals I would say they are a little run down and possibly not up to date unless he kept up on them. Ask if he could walk you through them so you can come up with a fare offer. take notes on what you see that needs fixing. Go home and work the numbers.
You have options.
I don't know ur situation but maybe he will do owner financing for a 2-3yr period with a baloon payment at the end with a small dp if you want to be a LL.
You could wholesale them or do a sandwich L/O. Speak to the tenants see if they would buy the home.
Bottom line is until you do your home work and see the homes and area (in case you dont know it) you cant make an offer. So go to work, I believe you came across a great opportunity.
good luck.
Never ever give up!
Richie