OfflineI posted this elsewhere but did not get any responses... but I think this is where it needed to be.
I am supposed to be looking at a house selling for $41,500. Owner is settling his mother's estate. He has made some improvements and describes it as move in ready. I asked what the lowest price he would accept for cash and quick closing and he stated $41,500. He said he had others looking at it but no deals yet. He said rent goes about $625/mo around there. Zillow estimates $45,000 and totalview estimate is $47997.
I need to know what doc to take and how to use it to put it under contract for 30 days. I told him what I do and that I had other investors,so that won't be a surprise to him. I'm just getting paralyzed thinking about what I need to do (due diligence-wise). When you assign a deal like this, do you ultimately leave inpsections and such up to the end buyer? Please help... I need to look at this property tomorrow and it will be my first deal if it happens..... I'm so excited!!!!!!
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.
in my opinion you have the right idea but the wrong house. Assuming you lock it up for 30 days and find an assignment investor to take it from you; where is he going to make any money.
Certainly, you would like to make $1,000 on the deal.That moves the cost to $42,500 + CC. If the TRUE market is $45,000, the investor can only make $2,500 which I think is under a thresh hold that investors would like to make at a minimum (25% is my minimum but some go as low as 20%) That would mean that a low end investor has to be able to sell it quick for $53,125 and that assumes no repairs needed.
Just any property won't do for an assignment. You have to run the numbers back wards. If this property was for you personal residence, that would be another story. Different story perhaps for a rental as well but other numbers have to be checked out for that option.
Hope this helps.
PS - If you really had the cash or an end buyer, I would also bet that the seller would go as low as $35,000 for a 5 day close.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
but I am assuming an end buyer would want to use it for residual income and when the market goes up, he could sell it for a profit.. or just keep 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.
Do you think I should offer $35k before I find a buyer? Do you think that would give enough incentive (provided there are no hidden costs other than cc?)
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.
Maybe he would let you L/O the house for a few years, so you can do a Sandwhich L/O to a retail buyer? Is there a mortgage on the house? If not, that's ok, too. Also, I wouldn't trust Zillow values or any of the other websites. They can give you basic numbers, but they won't be true numbers. I would get you a realtor (if you don't have 1), get the FMV for the house (not including bank reo properties), and go from there. If it's a cash cow, it might need a little fixup and then again it might not.
What you need to do is to get ALL the info you can about this house, before you throw it under contract. You should be getting the house at 70% (or less) ARV, minus repairs and your fee. Then, add your fee to the contract price, and sell that bad boy to your buyers.
as you know from your past employment, real estate is all about making the numbers work. For example, while this deal probably won't work for an assignment, it may work for long term investment. If he is looking for a quick closing, he either has to find an end resident buyer OR lower his price to attract investors.
For me, it is strictly about cash flow and ROI. For example, IF the REAL value is $45,000 and the owner is willing to finance the deal at $40,000 for 3 years, interest only at 5% plus taxes and insurance and full maintenance, and there actually no repairs needed to be made including major components; then even myself could be interested in the deal. Obviously, there has to be some inspections done before any deal can be finalized, but value has to be there for an investor. My general sayings: We are not the International Red Cross. Also: You can never make his problem your problem.
Hope this helps. If you need more guidance, please PM with your contact info and we will talk.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
No, the house is empty. His mother died recently and they have been working on the house and now have it for sale. He said rentals go for $625 I think.
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.