A Good WHolesale Deal Here?!?
I have the opportunity to purcahse a great 3 family house that in in pre-foreclosure... Here are the specifics... I need to know if this is a good deal:
3 family 1/1 - 2/1 - 1/1... 3 car garage, nothing needs repairs... Roof has 18 years left on warranty, new replacement windows, nice section of a blue collar area.
Appraisal: 378,000
Mortgage Bal: 301,000
Back mort pymnts: 13,000
Sellers needs $10,000
Is this a good wholesale deal?? Basically, someone could buy this place for $324,000 and instantly have $50,000+ in equity...
Any comments here?!?
Thank you!
[addsig]
By what you say on the outside it looks ok but dig into that whole thing to find out the questions you really need to know.
3 unit are they up to code?
Are they vacant?
What needs to be done to the place at the current time?
Are taxes and other bills up to date?
How old is the apprasiel?
Have you run comps?
Why has he gotten into the situation he is in?
These are just a few that come to my mind
Good Points -
The units should be up to code - I'm going to have to check on that...
Two are rented out ($1,000 and $550) and the third apt is owner occupied...
Nothing needs to be done to the place physically - just pay up the mortgage... Of course there should be an inspection on it before it's bought!
Taxes and Bills are up-to-date...
The appraisal is only 3 months old...
I'm in the process of getting comps... But should be OK!
He is an owner occupied, and can't afford the mortgage anymore... He lost his job...
Thank you so much for the response!
Quote:
On 2004-08-09 14:19, kfspropertymanagement wrote:
By what you say on the outside it looks ok but dig into that whole thing to find out the questions you really need to know.
3 unit are they up to code?
Are they vacant?
What needs to be done to the place at the current time?
Are taxes and other bills up to date?
How old is the apprasiel?
Have you run comps?
Why has he gotten into the situation he is in?
These are just a few that come to my mind
[addsig]
the 50k eq. is good but be careful . who had it appraised, was it the owner? the reason i ask is i have had appraisers come to appraise a home for me to acquire a loan and the appraiser would look at me and say "how much you need". i would give him the amount, he would write it down and walk out the door. the appraisal value may not be the true value. check the surrounding area find out what is the homes are actully selling for........kenmax
If you figure the appraisal is off by 5% and that FMV would allow a realtor to get involved for another 5%., you should definately have nothing more that 90% into the deal at the start - thus $340k is my Starting point.
Before you are so sure the place doesn't need any work, talk to the 2 rent paying tenants, ask them how they like the place, if there is anythign they think should be updated/fixed - probably at least 5k here; Then verify their security deposits - probably at least $1500 if not more.
Now, my guess is that you are close to about $330, and you are going to make-up 13k in back payments - and give him 10k????? By my math, your 50k instant equity is only about 6k after all 'accounting'
I'd encourage you to give him u-haul money and a 3nd mortgage for maybe 5k so that when you refi he can have something to look forward to. Take a close look at the comps from the appraisal and I think you will have a chance to see what you can buy at "retail".