Free And Clear Property
I had a lady call me about a house in a low income area. Her mother is older now and going to move across town with her kids. The house is owned free and clear. The house is accessed at $25,600 and they want $25,000. It is one of the nicer houses in the neighborhood and one of the better streets in the area. A small house: 2 bedrooms, 1 bath, a little over 900sf. I am going to look at the property on saturday. what kind of offer(s) can I make, if any?
Sale price: $25,000
Assessed at $25,600
Comps Range from: $32,900 - $53,900
Average house for sale: $43,200
2 bedrooms/1 bath, 940sf, built in 1930, the house is empty.
I have not seen the inside until next week but the roof looks like it might need some repairs. It looks like it is sinking in one spot and buldging in another. The foundation looks to be good. The windows look fair. It could use a paint job. It does not have Air Conditioning but it has a window unit which they took out.
Our Exit Strategy: We would like to sell straight out. If there is more work to be done than the roof and painting then we will probably just flip it. We do not really want to lease option the property but will if we have to. Are there any suggestions on how we can structure the deal? We also know that the mother needs to be the one to sign the contract.
Please help any suggestions welcome.
The numbers that your showing don't look that great. I'd pass on this one with those numbers and hunt down something with better figures.
Get to know the area well enough to establish at what price the house will sell in fixed-up condition within 30 days.
For my explanation I will assume 40k.
Now take 65% of 40k = 26.6K
Do a walkthrough of the house making notes of the repairs required to bring the house in good condition for sale.
I will assume 5k.
I would then deduct the 5k from the 26.6k, and offer 21.6k.
This would be a safe offer if you did your homework well.
If you wanted to sell it to another investor you would also want to deduct your desired profit from the 21.6k to establish your offering price.
There are several other ways to structure an offer, but this one is quick and simple, and it will get you started.
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Just curious, why kind of "better figures" are you referring to? Just wondering :-?
enlightened millionaire,
I am in the San Diego, Ca. area but I do some investing in the Hampton area as my wife's family all lives in and around Hampton.
If you take a closer look at this property and it looks promising to you, I may possibly be interested in the deal. You got some good advise from a previous poster on how to look at the property.
The big deal is getting control of the property. If you do it right, you'll have time for your due diligence. Let me know.
Dave
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