Offline*We are looking to assign to a landlord or to someone that wants to be a landlord until they can sell this house at a later point.
Hello everyone, I was hoping we could get some opinions about this potential deal (if it even is one!) as we are very new to this.
A friend of a friend is moving out of state and needs to sell his home. His house is assessed at $184,000 and is a 3 bedroom 2 bath. Doing the comps, home is worth $191,275. There are no rehabs to be done and house is in a location that is mostly rentals and some single family homes. Rent comparable are around $1200-1400/month. The thing is, he still owes $140,000 to the bank. He can't sell for his listed price of $175,000 and has said he would take the $140,000 for the house at this point(what he still owes). Being that this house has positive cash flow and the comps put it at an equity of ~$51,000, should we even bother making an offer of what he owes back to the bank? This is the first time we are dealing with a potential rental,so we would love to get some opinions. Thanks everyone, in advance!
Lease Option it
If the property won't sell for $175,000 as/is how can it be worth $191,000? The market is telling you this house is not worth $190,000. Reading and determining what an actual comp is a science in itself. I bet it needs some remodeling to bring that $190,000. So you must consider the as/is value at $175,000 or less when you evaluate this property. A property is only worth what it will SELL for!
What are the monthly mortgage payments? Contract assignment to a landlord buyer?
Will the seller let you do a sandwich or assignable L/O.
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
How long has it been on the market and what kind of marketing has the owner done?
If the area is mostly rentals, maybe he needs to be marketing to buy and hold investors instead of owner occupants. I knew of one seller who tried to sell his property for a year and finally got an offer and it fell thru escrow. He got frustrated and offed it to an investor for 70% of FMV. It took the investor 2 months to sell it for FMV after listing it with a realtor. Sometimes people just don't know how to sell a house.
Thank you for your reply! I understand what you are saying and I am not sure why the house isn't selling, to be honest. We are going to look at the house tomorrow so we will be able to evaluate any needed updates or repairs and can let you know. Thus far, the bathroom(via online pictures) looks fully updated but we don't know about the kitchen. House has central air and a finished basement. I think you are correct when you say the location of the house is predominantly rentals and it is in a city, so the target market is not tailored to single-family occupants. However, the house has only been on the market for 45 days. He needs to sell due to a new job so he would be paying rent in his new state and the mortgage on the old house. We are going to discuss out options with him, such as sandwich leases as well as his mortgage payments.
It is possible the comps are just not adequate because we didn't have a large pool to work from. In this area of the city, there is little movement. Looks like people are happy where they are, so not much bought or sold at all. Maybe you have a suggestion for comps when this is the case? Thanks so much, and I will keep you posted!
Thanks for replying! It has been on the market 45 days and he is desperate to sell because of a out of state. It would appear to me there hasn't been a very strong marketing campaign to get this house sold, so that might be *part* of the problem. As It could be due to the location of the house being dominated by rentals and not as many single-family occupants. I know in this neighborhood rentals are huge. The houses and apartments get rented out within days of being posted and that is why I thought it would be great for an investor looking to be a landlord. It is definitely being marketed as a single-family, rather than an investment opportunity, so like you said, this could be part of it. I will keep you all posted, as we are viewing the property tomorrow, hopefully.
I sent you a PM; talk to Karen, she can help you determine if a L/O is doable for this property
Wishing you success,
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
go to my corporate website and send the particulars to the email address in the "contact us" tab. Include your phone number, the info about the house, and I will call you this weekend.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
So, the owner is now saying he doesn't want to give it away any longer at the price of what he owes back to the bank. He said that if he couldn't sell for the listed price, he was just going to let the bank take it. Very unfortunate for him, and sounds like a terrible decision, but I feel like there is now nothing I can do other than make a low offer anyway, but I am not sure if I should do it.
with a L/O his credit won't get damamged; nobody wants to just let the bank take their house if they can avoid it... I think that the best thing that you can do is give him your business card, and tell him that you respect his decision, but if he changes his mind he can call you...
when he starts having to pay both mortgages he will call you
in the meantime, move on and look for more deals...
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...