OfflineI'm hoping someone can help. I'm going to look at my first property tomorrow to wholesale. This seller responded to a yellow letter I sent. The seller lives out of state(yes!) listed two years ago never sold, and currently has a renter in place. Please offer some advice opinions if you can on what to offer.(and get accepted...lol)
Details.
5 BDRM 2 Full Baths Appx 1018 sq ft
Seller says needs paint, possibly carpet and new kitchen cabinets (not sure if this is based on a cosmetic opinion or if they are not usable, will see tomorrow.)
Tax assesed at 225,000.
Here are comps in the area from my agent.
Sold SFH
$230,000
$224,000
$184,000
$266,000
Seller owes appx $175,000 and is current on all payments and taxes.
(not sure if this matters, seller listed at 275..dropped to 250)not sure if they will budge and they are unrealistic?
Thanks everyone!!!
Would love your input, i'm nervous and excited all at the same time!
Kristen, after speaking with the owner of the property does he seem motivated? Do you know why he is selling? Does he need cash?
Raymond
5 bedrooms in 1018 square feet would be awfully tiny... I suspect either illegal additions or a very choppy lay out. Can you pull the permit history before your next action?
Do the renters want to stay? What does it rent for? (I'm looking for positive cash flow)
Jill... the investor friendly REALTOR.
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Here is the tricky part. The owner does not speak english, and has her son translating.(AND i think he's about 14 years old) They have no interest in the property now due to living out of state, property is in UT they live in PA, so are just having the renters pay the mortgage until they sell.
I did ask what the lowest cash offer they would accept and I was told they needed to discuss and get back to me.
I think there will be alot of going back and forth on this one. Not sure on what they want to walk away with other then being rid of the property.
I need to update the sq foot, i didn't look on the finished basement section of the tax assesment....
Above ground 1018,
Basement 800...older style bungalow built in 1947. Tax assesement has it listed 4 bedrooms though(will also see what thats about)
Currently rents for $1000, great area of town, I think could be bumped up a bit...the owner has advised the tenant it's listed for sale and may have to move. I'm not sure if they would be willing to still rent or possibly do a lease option?
I don't believe the tenant will be there when I look at the property, if they are I'll find out. (the property is being shown by a family member that lives in the area)
Does not look like a wholesale deal to me. You already know the absolute minimum the seller will take is $175,000. They owe that much right?
The house is not selling at $250,000 so it is overpriced at that amount.
How much work does this property need to bring it up to the $225,000 comps your agent supplied?
The tenant can stay as long as the lease states the tenant can stay. Is the tenant month to month? I have buy and hold guys buying properties for $90,000 that they rent for $1200. Why would an investor pay $175,000 to get the same rent. This is something to think about.
Maybe a lease option. The first thing you must determine is will the seller take payments. If they say no, that strategy is dead. If they say they will take payments then what does the seller need to cover their mortgage? Can you lease it for more? How much more? What sales price can be agreed on. How much deposit do they want. Again, how much work does the place need. When can you legally get the tenant out? Can the current tenant do a lease option?
Kristen, I can almost guarantee you that a rental house built in 1947 is going to need work. If it is in perfect condition and needs nothing at all you may be able to make the numbers work. But it will be very tight.
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
Kristen, I think you should write down all the questions you would like to be answered. Since the owner doesn't speak english their are going to be a lot of questions that you might forget if you don't write them down beforehand. This property could be a gem but you need to look at the property and make sure you bring a notebook and write down any and all repairs that might have to be done. Also, sometimes talking to the tenant you will get a list better than you might see or find by yourself. Don't give up on this property because of the language barrier. Instead of the property being a five bedroom you might want to look at the other comps and then maybe convert it to a three nice big bedrooms. This could be the answer to selling it a lot faster. See if they will allow you to take pictures. Hope this helps?
Raymond
Really listen to what Michael Mangham is saying. He is one of the top producers in this business. He does it all straight forward and honest. He is a great mentor to the DG family. Best wishes!
Les
As a man thinks in his heart, so is he!
Think on these things: whatever things are true, whatever things are noble, whatever things are pure, whatever things are lovely, whatever things are of good report, if there is any virtue and if there is anything praiseworthy- meditate on these things
Really listen to what Michael Mangham is saying. He is one of the top producers in this business. He does it all straight forward and honest. He is a great mentor to the DG family. Best wishes!
Les
As a man thinks in his heart, so is he!
Think on these things: whatever things are true, whatever things are noble, whatever things are pure, whatever things are lovely, whatever things are of good report, if there is any virtue and if there is anything praiseworthy- meditate on these things
You guys are great! I know there isn't much room for negotiating, I pretty much need to go in and offer what they owe, maybe a little more but not much. I do have buyers that are looking in this area and could eek out the profit but it will be cutting it close.
What's deceiving to me is the house was listed at one point, and I have seen pictures, it looks pretty remodeled and I didnt see where any repairs needed to be made, but seller told me possibly cosmetic? So i'm curious to see what that is about too.
Either way i'm going to see, get all my questions answered and go from there and be thankful for the experience. Good or bad.
a big IF the seller will consider lease option, I don't have an interest in holding at this time. If this is possible I take it, it's also the way to go??
I'm not too familiar with the way that transaction would work out, but willing to figure it out in the meantime!
Kristen
You have received some great advice from others to your questions. By now you have probably been to see the house. It sounds like even though a wholesale deal is not possible, that there may be some other possibilities depending on the seller. Language barriers are difficult as well.
Let us know how things went, and ask more questions if needed. Keep working the deal.
judi
Can you make the numbers work by taking over the payments through an all inclusive trust deed? If the rent covers the payment, maybe they'd just like to get out of the landlord business.
I don't usually ask the seller what they would take if I'm serious about making the offer, especially a really low offer and there's nobody else in the ball field (no additional offers to compete with)... I just make the offer. Then the ball is in their court to take it or respond to you with a counter offer. A lot of time with a low offer, the sellers don't really think they'll take it, but, when it's there on the table in black and white, just waiting for the signature, and, they're motivated sellers... a lot of times you'll do better than you ever thought you would.
Jill... the investor friendly REALTOR.
Due to spam... no email links!