OfflineLast week I went with my realtor and looked at a house that was listed by an owner (not a short sale or reo). The house had been on the market well over 6 months. When we went to look at the house, it was trashed. It had been a rental for the previous 10 years. And had major deferred maintenance. The owner was asking $230K, which is current FMV. I wanted to offer him $150K, it needed $25K in repairs (conservative figure), I would have taken a $10K fee and sold it for $160K, giving the new owner a potential $45K profit. After talking to the owner, he owed $225K on the house and refused to take anything less, he wouldn't even consider a short sale. So, I walked away. Yesterday, I was perusing CL and BAM! Another wholesaler had the house listed. This is what they're offering.
Pay $9500 to purchase house (I'm sure this is the wholesaler fee)
Assume $225K loan
Current Payments are $1900 mo. including taxes & ins.
Rental for area is $1500-$1650 (no cashflow)
Repairs needed $25k minimum
ARV $230k
After adding all this up, if someone was to purchase the house, assume the loan and payments and make the repairs, conservatively they would be in it for $259500. How is this a deal? They're in the hole for $29500 and they can't rent it out with cashflow. Am I missing something here?
KimmyJ
You did not miss a deal! I think the owner of the home put that add on craigslist to try and be clever. Numbers just don't add up!
Rommel
There's nothing you missed there! NEXT!
"The entrepreneur always searches for change, responds to it, and exploits it as an opportunity." — Peter F. Drucker
But a bad one. I think that was one I would have stayed away from.
That sounds really crazy...Doesn't sound worth it at all
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All you have to say is NEXT!!! Some people just don't know what they are doing. There are TONS of house out there so just keep on walkin!!!
Kai
Money won't fall into your hands, you have to earn it!
Kimmyj,
You definitely did not miss out on a deal. I agree with bmel16. I think the owner is trying to pull a fast one.
Keep going.
LORICT
also i think the seller is unrealistic. In this soft market he is looking to make 5k more than FMV. With everyone in their right minds knowing they can get a distressed property, especially one with lots of rehabbing to be done, a heck of a lot cheaper, why would anyone want anything less. you didn't miss out. However, I do have a question. Other than owing the bank 225k for the house, what are his other reasons for selling? Cus again, it can determine if he really is unrealistic at which continue to move on. To many signs are there to show that what he is asking won't cut it in this market. I would keep my eye on this property to though. Sooner or later reality will kick him in the head and he'll realize that he'll need to drop the price dramatically inorder to get it sold and off his hands, or his problem will get worse. At that point you might be able to jump back in. Try following up with him every 3-4 weeks to see if anything changes.
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The seller lives in Florida. The home is in california. It's been a rental for 10 years and I think he sicks of it. Besides the owner being unrealistic, the wholesaler is unrealistic. I agree that the wholesaler is being shady. His description of the property was not truthful. The pool needs at least $5000 worth of repair (I know because I had to do the same to mine) and in the wholesaler's ad, he said "A few tiles needed to be replaced." Major misrepresentation! My realtor will check back with owner in a few weeks. I'm just glad that I didn't make a mistake by walking away. When I saw the wholesaler advertising the house, I thought "Wow, I need to reread Dean's courses! I missed something."
KimmyJ