Flip Properly
I have read several ways to "flip" property and the most are vague. Can anyone advise on the following scenario: Example -
Amount owed on existing laon: $110,000
Short sale proposal accepted: $90,000 payoff (buy price)
Repairs: $3000
Appraised value after work done: $140,000 (sell price)
Sell with owner financing: 5% dn $7000
Remaining 1st lien to sell at closing: $133,000
Purchase price of unseasoned note: $110,000
1st mortgage pmt. at close: $1060
Total cash proceeds at close: $ 118,450
Total profit: $25,450
This sounds like a typical investor with all cash on the purchase price of SS $90,000 then owner financing etc. Or do Banks offer investor loans on a short sell?
My question would be how are you justifying a $20K short sale with potentially $50K equity at the short sale price. Just a thought.
Also how are you going to do the repairs if you don't own the property? You are going to have to find a way to pay the bank off to do repairs.
Running through your numbers:
$140 sale price
$ - 7 down 5% (to you)
$133 note
$- 23 note discount ( I agree with empire this seems steep depending on buyers credit)
$110 note proceeds
$- 90 to bank
$ 20 cash remaining
$- 3 for repairs
$ 17 (to you)
for a total of $24K plus your first payment. It looks about right, less closing and holding costs for the repairs.
I have NEVER had a bank offer my financing on a short sale, but I have never asked. I guess I was always afraid that would bring up the question, can this person really do the deal. Though I have heard people claim that banks have financed it for them.
With repairs in there I woudln't necessarily classify it as a flip, but more of a rehab. Take the repairs out and you could have a flip.