OfflineSo looked at a potential cashflow property today to assign. Seller is asking $41.5. When I talked with him on the phone, he said he had already discounted it from $47K and had lots of potential buyers who could not get a loan from the bank. He said they had jobs and money but could not get a loan. It is an old mill village home so the neighborhood speaks for itself although it appeared to be a neighborhood that did not seem to be dangerous. haha.. you know what I mean.. He has put on vinyl siding, added all new windows and laminate flooring. He remodeled the bathroom and added an 8' closet. Most mill homes that have not been updated do not have closets. It does not have central Heat and Air. It has a gas stove that he said heated the whole house and a window a/c. He was raised in this house. It is a 4 room house with a backporch area the width of the house that has been built in so it could be a bedroom or office. I told him what a nice job he had done and that it looked move in ready, but that I needed to do comps and consult with my investor team (that's you guys). He is trying to sell it as his mother's estate. He has 2 brothers and he admitted they (his brothers) needed money and needed to sell it therefore they did not want to rent it out. I told him I understood that when trying to settle an estate, it was something they needed to get settled and have money distributed. I also told him that an investor usually wants to get a property at a 25% discount of ARV to even look at it, and that his best bet would be to sell it to someone who wants to live in it at that price. I told him I understood his problem was that banks are not lending to the people who are interested in living in this house. He agreed. His wife was with him and she said it would be a good house for a young couple just starting out or an older couple. I told her that a young couple maybe, but an older couple would want HVAC. She also agreed. More than once I said he would probably have to come down on the price to sell it and close quickly.. he seemed to understand and was receptive. Since I don't have comps yet, I told him I would crunch some figures and if he had not sold it by the time I get back to him, I would let him know what I come up with. He became very interested at that point and told me to see what I could find out.. Now I need to know if it would be a good assignment for investment property IF: it's fmv is $45K or more and IF after deducting $6k cc and $2k for me... leaving $37,000 minus $2k oops factor, would $35000 be a good offer?? Of course all this contingent upon inspection, appraisal, etc. He tells me rent is going for $625/month... which could be true. He seemed to be very receptive to everything I said and I really believe he will accept less than he originally stated. Please all comments/suggest/criticisms are welcome. This would be my first deal. This is the same one I talked with you about Bill. You told me to PM you and I did, but never got a response. Not sure if you got it?
Forgot to add the house has a wired workshop behind it... fairly large.
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.
www.totalviewrealestate.com and type in the property info. If it doesn't come up with any data then have a real estate agent run comps on it and determine the fair market value. From this FMV you should offer no more than 65% FMV minus any repairs that are needed. I would have an inspector and a contractor come in and look at it to estimate your repairs for you.
A deal does not qualify as a deal unless you get it for at least 70% of FMV minus the repairs needed. You will not be able to assign this unless you get it for that price. The profit margin is not big enough for any investor to be willing to pay you for it.
Hope this helps!
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That does help. So even if an investor justs wants it for a rental, he still needs to get it at 70% of FMV after repairs?
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.
never got the PM. Please try again.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
An investor wants at least 35% off FMV. You want to at least be offering 27k for that house. Even if you wanted to rent you still want at least 20% off.
I got my mind made up.....
www.Kingjussinvestors.com
www.jussinvestors.com (buyers site)
investor is a buy and hold investor you can push the numbers to 80% ARV, but the house must cashflow.
Of getting a deal as low as possible for the investor is because he wants to buy it low and then turn around and refinance it for a higher amount and put money in his pocket to pay for his next deal and still have a low enough mortgage payment to be able to charge fair market rent and make at least $200 cashflow each month.
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"In order for me to think outside the box, that would require me to acknowledge that the box actually exists. In my world, there is no box."
~Matt Larson~
some investors want to cash out the property, but if that is the only investor you are looking for then you are missing a whole segment of the market. There are old school investors who just want to hold. They pay cash or use private money and just sit on the property for 5 to 7 years or more and then sell. I work with an investor who does just that. He even pays 110% ARV because he does creative financing with nothing down and makes the numbers work with long term holding for 10+ years. At first, I didn't get it, but when he showed me the numbers I was amazed. The guy is brilliant. If you can find the old school investors who just want to hold you can sell properties to them all day long at 70, 75 and 80% ARV. It's a gem market.
A True Gem Kimmy!!
It hard to beat old school. They just like to buy things out right. (no payments) Gotta Love em....
DC Terry,Sr.
Offer $25k and let them know you are flexible somewhat
If they have buyers who have jobs but cant get loans that means they people who cant afford the home. If they don't at least have the cash, they are window shoppers.
He's simply bluffing you because he knows he's in a corner and doesn't want to look like a sucker.
Deals will always be there; if this doesn't give you what you want, move ontot he next one
Thanks guys... I had forgotten where I posted this so just now getting back.... haha.. still learning my way around here.
That is all good information that I needed. Kimmy, I'm not sure what you mean by selling to investors for 80% LTV (loan to value?).. Or did you mean FMV?
Elix, you're right, there are plenty of deals out there, but since I have this input, I am going to make him an offer of 75% of $45k (33,750) minus $2500 (my profit) minus $6K (cc) = $25,250... all contingent upon appraising and no repairs... Am I in the ball park yet? If accepted (just
"if" for my learning experience)I would put it under contract subject to? it's appraisal and inspection? Seller would have to pay for these, correct?
Speaking of repairs, since there is no HVAC which would run around $6000, should I assume this would be something an investor would want in this house before buying?
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.
Shirley, you should be able to get a HVAC around $3k (give or take)
DC Terry,Sr.
HVAC quotes mostly go by the square ft. of the house, too. There 400 SqFt. per ton, so if the house were 1,200 SqFt., you would need a 3ton system. Depending on the system type that would work best, you're talking around $2k minimum for a 3T split system, not including ductwork and diffusers, electrical wiring, thermostat & wire, circuit breakers, the line set to connect the two, 1" pvc pipe for the condensate drain, and labor. If it's a packaged unit, add about $600 to $1k more to that price.
I know the stuff, when it comes to Hvac ~ I used to help my brother install, troubleshoot and repair them in the summer. (:
***
Thank you... great information!!
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.
prices run $4-5k here in VA for 1200sq ft on change outs and they use 2ton
Mike
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
That is all good information that I needed. Kimmy, I'm not sure what you mean by selling to investors for 80% LTV (loan to value?).. Or did you mean FMV?
quote]
Sorry it should read 80% ARV. After Repaired Value.
In the Carolinas, if you go with the smaller guys, the price is great.
@Mike- that alot for 1200sq ft down here. (if you know how to shop) I guess it all comes down to Location, Location, Location.
DC Terry,Sr.
That's all good information about HVAC prices, but I'm curious if any of you guys would assign it to an end buyer (if the price is right and all other things work out) without having HVAC?
I haven't made an offer yet because I have had the flu and have been trying to recuperate (man, this stuff is nasty!)
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.
Yeah, that's what happens when you're in UVA college town and in high growth area where prices rarely drop.
Billionares and $22million homes. Charlottesville/Albemarle VA
Median prices $350k
Mike
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
If you have an end buyer who is interested and your numbers are right, you can certainly assign it to an end buyer.
HVAC has not always been a "requirement" in life and there are still many people who live w/o it.
Good luck!
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Shirley, if I didn't have the funds to close it, then yes I would assign it. I would not offer what you came up with though. I know that you pm'd Bill, so I'll let the old hat go there with you.
Also on the HAVC, if you're assigning it to an investor, it's not an issue. Just factor it in your asking price.
The seller is trying to sell the house. You're trying to sell a great deal!!
DC Terry,Sr.
Thank you for that information. I wasn't sure whether it would have to be factored in or not; and actually, Bill said he never got my PM so after posting it on here, I haven't talked with him about it at all. What is your take on the asking price and what I should offer? BTW, he posted the house again this weekend asking 1100 more than before~~ go figure. Anyone else who has any advice for someone who is still green, please feel free... I am anxious to get my first deal under my belt!!
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.
Shirley,
I may not be the one to ask about that. I am a low-baller. I have a similar situation, but he's in shortsale. $5k is my 1st offer, but I'll max at $15k. I'm leary of smaller homes in rental areas, so I price them according. Cash buyers pay what we are willing to pay for properties. I need to be able to pay it off quickly or flip it. The price has to be very good to do that. Now, those are just my thoughts.
In regard to him asking for more, he may just be trying to expand his room for negotiation. Get some other properties lined up. Don't sit around waiting for him.
Whatever you decide to do, hurry up and do it. Times A Wastin!!
DC Terry,Sr.