Anyone Flip A Deal This Way Before?
Talked to a lady about selling her home to me for 65k. home is in a horrible state. needs a TOTAL rehab. comps at 160k. i may be able to talk her down 5 or 10k but the problems are:
1. i dont know the cost of repairs but i'd imagine i can get someone to walk through the home and give estimates.
2. i dont have any money!!! how would i negotiate with her to allow me to pay her off when i resell the home. I've read of people getting homes on terms, fixing selling and paying off.
Any advice someone can give to assist me with creatively financing the deal would be greatly appreciated.
Thanks in advance,
Verbatim
Whatever your exit-strategy may be, you need to accurately budget rehab costs.
So there's your first objective.
The deal will only make sense as a wholesale flip if 65% of FMV minus rehab costs minus Purchase Price equals positive for you.
But I guess you knew that...
If you want to go for the Gold, you have a choice (if the numbers above make sense) to either find a HML or a Partner who is knowledgeable on rehabs.
So there's your second objective.
And last but not least, be prepared to walk away if the profit ain't there.
There's plenty other houses out there.
So once you get a grip on your rehab numbers, either possibility will fall into place.
[addsig]
Someone more knowledgeable could probably give you a better answer, however...maybe the seller can offer seller financing?? She could carry the note, file a lien against the property, whereby she would get paid once the property is sold. Or you could enter into a lease purchase, maybe?
Does the lady own the house? If not, you may be able to take the property subject to her current financing. If she owns the property, you could ask her to carry the note. With either of these approaches, you could physically accomplish the clean up at little or no cost and put it on the market for a reasonable profit. You could also get it under contract and "wholesale" it to another investor because of the equity you have in it. One other good option, is to get it under contract with a full price offer and find a hard money lender (see your local classified for "I make real estate loans" or search the internet for hard money lenders), who will finance up to 70% of the repaired FMV of the property. This sounds like a property to get under contract anyway you can.
[addsig]
you can alwalys do an option with her, find someone who is qualfied to buy a house, have them get a subject to appraisal, get a loan for 80-90% on that appraisal. You then get your option money, she gets out of the house, the new owner gets a house and fixed to how they want it and everyone is happy