OfflineAsking more questions about properties!!! I get so bummed out because I'm not sure how much renovation needs to be done (dollarwise) to a property. I looked at a house today that is listed at $39,500. It is a 3BR 2BA brick, 1716 SF. It has NOT been taken care of is all I can say and it needs some updating badly as well as some replacements of walls, ceilings and floors. The seller states it needs $17-19K in repairs, but I'm thinking it needs more. There are hardwood floors in 3 rooms and they all need refinishing. The carpet in the den needs to be stripped out and replaced. There are some really bad places in the ceiling in one of the bedrooms...looks like there was a major leak and the ceiling is sagging down in that spot. It needs paint throughout and probably a new HVAC. Although it didn't look bad (the ac unit) on the outside, all the vents on the inside looked as if they were rusted and bent up. The floor in the foyer needs replacing as you come in because you an see there is a half inch crack that you can see goes straight to the ground. There were obviously some leaks but it has a tin roof so I don't know if the roof was added after the leaks or before. It doesnt look new however, so I'm guessing it was before.
Does anyone have any suggestions about the repairs and/or the offer I should make. I could flip it to a rehabber if the price is right.
I have another question about another property but I'm going to start a new post so as not to be confusing.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
The seller/realtor called me while I was inside the house.... (He gave me the code to get in).. and told me he just had another offer and that I needed to submit my best and highest offer by the am. I told him I had to consult with my partners in crime (you guys..hehe).. and I would get back with him as soon as I could tomorrow. So, what say you, partners?
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
a number of questions come to mind. 1) What is the ARV of the home? 2) What are the comps for similar homes close by? 3)What type of city/location is it in? 4)Do you have a rehabber that you can flip it to? 5)Is the home a short sale, foreclosure or REO? 6) Could the Realtor be playing you about the other offer just to get you to see if you can pull the trigger? 7)What is your strategy for EMD? inspection? closing? 8)Can you make a better estimate on the repairs add value to a rehabber or investor?
Wishing you the best.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
You're making me think too hard... it's late... LOL
Ok, the comps are looking like in the 70s-90s. The realtor said it's ARV would be $115, but I think that's stretching it. The house right beside it is for sale for $74,900 and it's been reduced by $5000; and it has already been renovated and is a little nicer than this one will be even after repair.
As far as the location, it's a decent neighborhood.. Old north Anderson.. (South Anderson is the bad side of town).
I do have some rehabbers, but I have not discussed this house with them if that's what you mean. I have about 3 and I feel sure at least one would want to rehab it.
I actually thought it was FSBO when I first saw it since there was no sign in the yard. But there is a lockbox and he gave me the code over the phone and just said to go look at it. So he must be a realtor/owner who just bought it to flip, and yeah I thought he might be playing me too. Because I saw that house 3 weeks ago. As a matter of fact, I called him and left a message 2 weeks ago and we played phone tag a few times but I finally caught up with him yesterday. Then he texted me last night and said he had others that were interested, but today he said he had an offer...sounds fishy, huh?
Since I'm not dealing with a bank, I'm going to make a very small EMD. But closing and inspection... Yikes, Bill I haven't thought that far ahead....I do have a remodeling guy that is going to look at another house with me tomorrow and he said he wouldn't charge anything for an estimate. I might see if he will look at that one too and give me a better idea. I'm not too sure about that roof or HVAC.. Stuff like that I need an expert's opinion, but if they both need to be repaired, I'm thinking it would run closer to $25000. What do you think?
If it comps out at $75K and repairs $25K, I'll offer $30K. If my fee is $5000 that would leave $15K for the rehabber. I don't know what rent is going for but I am guessing it would be at least be $500 or $600.
Do you think I should just assign this house rather than wholesale it? I get confused about which one to do for what. If I wholesale it, I'll do a double closing with transational funding. If I assign, I really don't need to do anything but sign the contract... am I right? Would it even make any difference?
I know I'm probably doing everything bass ackwards. I didn't have time to go to the courthouse after I looked at the house and I'm not sure how to find comps online. Zillow and totalview did not find the property.
Thanks for your input Bill. I really appreciate your comments and suggestions.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
I answered your questions... well, most of 'em anyway.. and I had another question for you if you get a chance to read it.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
You may be able to go to the courthouse online and research the property.
Also check the duct work since theres rusted vents-usually indicates moisture, maybe from wrong sized hvac
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
Is the structure of the home sound? foundation and so on. If the roof is leaking you may be looking at a lot more in repairs depending how long it has been leaking. I would offer 20k if your repair #s are in the ball park. 15k profit is not much to play with especially if its an old house. If they run into an unseen problem it could eat up a good portion of the profit, and I know when working on most old homes something always comes up.
good luck and dont get bullied into paying more then you should / want to.
Richie
I never thought of that... moisture. But some of the vents were all bent up like they had been taken out and something happened and they wouldn't fit back in..??? Who knows what that's about. I will go to the courthouse if he hasn't sold it by tomorrow and will have it looked at by a remodeling guy. He was supposed to do it today but his child had a ballgame.
Thanks, Mike.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
I think the foundation is good. I walked around it and it looked like a normal brick house...nothing weird looking. I'll find out tomorrow if my guy gets to go look at it for me, but you think I should still allow about $5k for unforseen problems? Don't know if I mentioned it, but the roof is tin... I've never seen a tin roof on a brick house....it doesn't look very new though so I'm thinking it is leaking. Thanks, Richie.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
That's what I had!!! So the house was sold. But I'm not blaming myself entirely... The handyman that I wanted to check it out couldn't go the day I needed him to, and I was afraid I didn't have my repair numbers close enough. I need to find a back up handyman.. Next time, I'm locking it up and then worrying about the repair cost if it even looks promising. Anyway, I contacted the owner and after he told me it was sold, I asked him if he would have anymore and he said yes. So he will be sending me emails when he has others available. He buys cheap and wholesales without fixing them up. I can then wholesale them to rehabbers if there is enough room to do so.
I also got another good lead Saturday. I went to look at a house that was listed for $49,500. The owner puts up the money and his friend does all the work and then they sell and split the profits. They haven't even finished the inside of this one... in fact they have barely started. They are completely gutting and renovating the house. They had already put siding and a brand new roof and in the process of renovating everything inside. There was another close by that they had renovated and he said he sold it for $60,000, but it looked a little bigger than this one. They also do owner financing which is a plus. I gave him my card and he said he would look forward to working with me. He said they would have more in this area soon. I told him I wanted to look at this house when they were nearer completion. My question is: **** If they owner finance, how can I make money in the middle?****** Would I have to see if they would do a lease option and then lease option it to the third party? Or maybe lease options actually fall under the umbrella of owner financing... hmmmm.. not sure about that..Does anyone know if someone says they owner finance, could they be including L/O also?
So this week, I'm looking at some more houses and am determined to lock up a property this week... maybe 2 properties.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
RE: #9... How can I make money in the middle if the seller owner finances? Lease option would be the first thought, but does owner financing include lease options?
Shirley
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
You make money in the front, middle, and back end of a Sandwich Lease Option deal. Owner Financing is just about the same thing as a lease option, where the owner or seller agrees to take a mortgage on house, just like a bank would at a certain interest rate, and certain period for a certain amount of time (years).
The way you make money in the middle, is buy Sandwich L/O, so once you lease option it from these guys, you turn around and lease option it to a tenant buyer. You get the down payment from the tenant buyer, give the owner what you agreed on for a down payment (aka option consideration money), (make sure the tenant buyer gives you more than what you agreed for a down payment with the seller), and whatever is left you keep, which makes up the front end profit. The "middle" end, you makes the payments a little higher than what the house would rent for, and the extra money left over from making your monthly payment to the sellers goes toward their down payment as well (and you get to keep that extra profit). The back end, is when the tb exercises their option to buy the house, so the sellers get paid off and you get the difference from the purchase price the tb agreed on, and the price you and the seller agreed on. So, it's a win-in-win for everybody.
With the L/O from you to the seller, you can also have them count a portion of your payment to them as part of your option consideration, too. I hope this helps you. Karen is THE expert when it comes to lease options.
Shirley
I understand the concept of sandwich lease options, and that was a very good explanation.... so thank you for that. But I was just questioning if they didn't want to do a L/O and just wanted to owner finance in the traditional way, there would be no way I could assign it or wholesale it or anything? So I guess you answered my question when you said that L/O is owner financing. So they shouldn't have a problem with doing it that way.
Having said that I understand sandwich L/O, I am still trying to wrap my head around the concept of making money in the middle. For example: If my lease from the owner/seller is $400/month and the lease to my t/b is $500/month, the extra $100 would go toward their purchase, so how could it be my profit and go toward the purchase price at the same time?
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
From what I've been tought, you get to keep the $100 spread and do not apply that money towards the potential purchase. The $100 could be considered a house payment and the tenant buyer could claim ownership (aka equitable interest). You do not own the property, you cannot sell it - you'd have to buy it first.
Also, make sure that your lease with the owners is for a longer term than the one that you have with your tenant buyer. If your tenant buyer decides to exercise their option, then you have time to exercise your option with the original owners.
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Thanks.
Ok, thank you. I wasn't sure about that middle income, but you cleared it up for me.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
Thank you for all the information today. I really appreciate you!
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
This time another FSBO.... It is still being renovated, but they have already advertised it in CL for $49,500. So far all they have done is put on the roof and the siding(which looks good). It is in a run down neighborhood but there are few scattered improved houses around it. They are going to replace floors, cabinets, bathroom fixtures, paint, etc... in other words, they gutted it and are rebuilding the inside!! My question is would it be too early to lock it up when they are just starting the inside and I don't know if they would skimp on anything if I did lock it up so early. Even if I did, I couldn't flip it to an end buyer until it is finished so they could look at it. Why would they advertise it when it is nowhere near being completed?
If it turns out nicer (and it will) than the houses around it, it might not appraise for the price listed. So, that could be a problem. Any comments or suggestions?
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
They are going to owner finance so maybe it won't be a problem after all. An appraisal will not be necessary. I'm thinking sandwich lease. Does anyone think, since this is a good property for L/O, that I should go ahead and lock it up?
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
The $100 you keep for a profit, BUT you apply that $100 as a "credit" and equitable interest, which also adds to the option consideration the TB's already paid. So, you get to do just about whatever you want with the $100. It all works out for everybody, when it's setup right.
If they're selling the house as is, they are probably hoping to get a quick buck for it. You might be able yo sell it on owner L/O to a rehabber, or wholesale it as it is.
I found a house today that the realtor said the owner would definitely lease/option. So now I have to get it under contract. Just got to get my ducks in a row and all the paperwork (from my list from Karen) ready. It is not bank owned thank goodness!! The realtor is going to get comps for me and I talked to her about working with me. She is willing to make low offers.
I have another house that I looked at before that I am going to have a remodel guy look at to give me an idea what repairs need to be done. Then I'm going to make an offer on it too! This one is not bank owned either.
Things are going to start happening... I can just feel it!!
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
The house is under renovation and they have a lot to do, but they have already advertised it for sale. Should I go ahead and lock it up even though it won't be finished for a few weeks? Has anybody done this before? I'm afraid if I lock it up too early, the time will run out before the finish, but if I wait too long, it might be gone.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
RE: # 16, #17.. need advice.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.