Please Feel Free To Share Your Thoughts On This With Me. ONLY EXPERIENCED PEOPLE!

Here is what I see based on the numbers you gave. This is how your potential buyers will see the deal

ARV is $500,000 tops.

Rehab/remodel $25,000. You did not list a accurate rehab number. You will need a remodel/rehab sufficient to pull that high ARV. This number is essential in the offer making process. So $25,000 is just a guestimate on my part and is most likely a LOW figure. It is always best to go with a high figure and ad 5% for overages.

Your buy price is $415,000. I assume you want to make $5000. That makes your buyers price $420,000.

So know lets look at this deal from your buyers perspective.

Lets sat he actually sells the property for $500,000

He subtracts closing costs, commissions and money costs = 10% = $50,000
He subtracts other holding costs based on a 90 day hold. Taxes, insurance, utilities etc = $2500
He subtracts his rehab costs $25,000
He subtracts his purchase price = $420,0000

Net profit is $2500 providing rehab is actually only $25,000 and he has no additional expenses.

This is not a deal and not worth pursuing. This is why those other wholesalers could not move it. The seller is at least $35,000 on the high side. I guarantee the rehab/remodel costs will be more than $25,000 to bring a $500,000 sales price.

If you had accurate rehab/remodel estimates and good comps to show the seller what the situation truly is he might negotiate. Then again he may owe so much that he can't come down or just be totally in la la land concerning the true value of his property. This would mean a unmotivated seller. We are always looking for motivated sellers!!

Keep taking action that is how we learn!!
Michael

Here is what I see based on the numbers you gave. This is how your potential buyers will see the deal

ARV is $500,000 tops.

Rehab/remodel $25,000. You did not list a accurate rehab number. You will need a remodel/rehab sufficient to pull that high ARV. This number is essential in the offer making process. So $25,000 is just a guestimate on my part and is most likely a LOW figure. It is always best to go with a high figure and ad 5% for overages.

Your buy price is $415,000. I assume you want to make $5000. That makes your buyers price $420,000.

So know lets look at this deal from your buyers perspective.

Lets sat he actually sells the property for $500,000

He subtracts closing costs, commissions and money costs = 10% = $50,000
He subtracts other holding costs based on a 90 day hold. Taxes, insurance, utilities etc = $2500
He subtracts his rehab costs $25,000
He subtracts his purchase price = $420,0000

Net profit is $2500 providing rehab is actually only $25,000 and he has no additional expenses.

This is not a deal and not worth pursuing. This is why those other wholesalers could not move it. The seller is at least $35,000 on the high side. I guarantee the rehab/remodel costs will be more than $25,000 to bring a $500,000 sales price.

If you had accurate rehab/remodel estimates and good comps to show the seller what the situation truly is he might negotiate. Then again he may owe so much that he can't come down or just be totally in la la land concerning the true value of his property. This would mean a unmotivated seller. We are always looking for motivated sellers!!

Keep taking action that is how we learn!!
Michael

Sorry, forgot the rent to own scenario.

$9000 down is ok, of course you would have to ad to that to make your up front money.

He wants $1000 more that market rent and you would have to ad to that if you want to make monthly cash flow.

There will still be the rehab costs unless you get a tenant/buyer that will move in and do the work themselves.

For your end I would think $7500 down and $2000 a month would be a good place to start.

Then you could do a $10,000 down (option payment)and charge $2500 a month. Something like that.

Hope that helps,
Michael

You're awesome.

I forgot to mention that the property is free and clear. When I spoke with seller last night I told him "we can do $370k." which was my first initial offer. My intention was not to pick it up for $415k. My max offer which I planned as of yesterday to offer was not more than $370k.

I was looking at a wholesale between $5k-$10k

I am going to pull up some low comps and present them to the seller. My max offer would be

On the rent to own scenario
My first initial offer was $1700 per month with full asking price, 2 year lease and I told him "we can't pay you too much money upfront and monthly because it will hamper our ability to take full responsible of the repairs and maintenance." (My tenant buyer will be responsible for them).

I already started posting some ads on CL before posted earlier this morning

Rent To Own with as little as 5% down and only $3,000 per month
3 Bedroom/ 2 bathroom.
lot size: 2,384 sq ft
Living Area: 10,000 sq ft
Bad Credit or no credit OK!!
No Bank Approval Required
EMAIL ME TODAY OR Call Me NOW through the above contact !! I'm not a REALTOR!

It is either the seller goes down to my wholesale pick up price $370k or he reduces the monthly payment of $3k he is asking for OR I AM MOVING ON TO THE NEXT. So many deals out there!

I have learnt my lesson before DON'T EVER get emotional attached to a property but FALL IN LOVE with the numbers.

My Favorite Quote Of Today: "You may be in a tough time but that setback is simply a setup for a greater comeback."- Joel Osteen

Thanks you once again!

The only way to look at this deal in in your rear view mirror as your speeding away.

Reminds me of an elderly lady that called me awhile back. She had a run down house in a bad part of town. She had renters that trashed the place and needed to be evicted. She said she wanted 175K. I asked, Lily, I dont think the houses are going for that much in that area, She tells me, the comps are at 120K. But if the comps are 120 and ur house needs a lot of repairs and u have renters that wont leave, it wudnt be a wise financial purchase to pay $175,000.
She tells me, "But thats what I want. I told her OK, well good luck.

I come across similar deals everyday, some even wanting more than fair market value like Lily.

I try to be nice and understanding, but I def dont try to make a deal out of everything that comes across my desk, look for that diamond buried in the coal heap.

I like your numbers to offer. If you r not embarrassed by it hen it's to high. That's negotiation. You can always come up some. At least to your final best. $1700!per Mnth sounds like a good first offer for monthly. If rent is 2 k standard then 3 k to OWN seems a little steep when your buyer still has taxes, insurance, maintenance and repairs. Mike has some great points and knowing the exact repairs from a professional estimate can be a great negotiating tool. Also your contractor may find something you or the seller missed that may save you from a bad experience. Nonetheless it will give you peace of mind and ammunition to substantiate a lower offer. I would offer 5 k down $1500 per Mnth $370 k with 6% interest and say I WANT IT. Let him chew on it and wait for a response or counter and in the meantime market for a buyer for 10-15 k down $2575 per Mnth for 475 k total price and 8-9% interest. At least you will begin to build your rent to own buyers list and gather all numbers from your buyers for downpymnts afforded and MNTHLY PYMNTS afforded for future deals. If and when he comes back with numbers then you may have your buyers numbers started so you will KNOW what you can pay based on them. THEN you will know exactly what you can pay. If you can't buy for the numbers you need then no brainer you give final offer n say if can meet those offered terms - we will have a deal !!
On a number of occasions my sellers have called a Mnth later and said ok lets DO IT.remember YOUR in the drivers seat. You don't NEED to buy. He NEEDS to sell. Good luck !! Exciting !!