Newbie Deal Question

After sending out my first set of letters to pre-foreclosures, I had an appointment this morning. Here are the details...

3/1 in a hot area. Needs to be renovated. One mortgage for $136,000. Back taxes for $450.

Other houses in area that need renovation seling for ~ $180,000.

I am wanting to get this and wholesale it to someone else.

They have had it on the market with a realtor for $259,000. Nothing - of course.

The daughter said she wanted $205,000. By the end of the conversation, I told them that I could probably pay the $136,000 mortgage and get them $10,000 cash in equity. She's an older lady who has done the foreclosure thing 15 years ago. Does not want it to go to the Feb 3rd date. I told her I needed to know by Monday (only so much money to work with and would buy somethng else). I was just at the grocery and she called me. Said she wanted to make sure she had the right numbers for the right people. She also said that a couple came by today also and made no offer. She keeps saying she doessn't have a lot of time etc.

Should I just sit back and wait till Monday and see. Or is their some other tactic. Should I call and say that I am no longer able to get the $10,000 I thought I would get after all and offer her $8,000 to put the pressure on.

Obviously this would be my first deal. Thanks for the help. confused

Comments(5)

  • who_me16th January, 2004

    whats your exit strategy? what price are you planning on selling at?


    just a couple that come to mind, being new myself it sounds good to me. Best of luck to you on this deal. Let us know how it goes.

    Dave

  • amyweeks16th January, 2004

    My exit strategy is to assign the contract to someone else right away.

    If the deal goes through with these numbers, what I don't know is how much to ask for from the investor.

    Any thoughts?

  • who_me16th January, 2004

    This is where I get stuck too...

    I think I would get some comps on the retail price, then make sure you leave enough profit for the investor to make money. Make it a win-win.

  • tanya121516th January, 2004

    It may or may not be a good deal to flip to another investor. It depends on how much in repairs the house needs. If it needs extensive fixing up, then I would buy it, fix it, and sell it myself. If it needs minor repairs (paint, carpet, etc.), then I would flip it for a reasonable price. Here is an example, if the property needs at most $5,000 in repairs...

    COMPS = $180,000

    Balance = $136,000
    CASH for Equity = $10,000
    Repairs = 5,000

    I would flip it to another investor for $151,000. You would get a $5,000 or 50% return on the $10,000 you paid out for their equity. The investor would shell out the $5,000 to fix up the home and make $24,000 after selling it.

    In order to do a quick flip, you should leave enough profits for the investor to consider taking off your hands quickly. If it needs more than $5,000 in repairs, then I would buy it, fix it, and sell it myself. It's up to you to decide what to do with the deal. Just remember that you need to get back the $10,000 you shelled out for their equity before you make any profit.

    Tanya[ Edited by tanya1215 on Date 01/16/2004 ]

  • amyweeks16th January, 2004

    Thanks for your help. I hope I can get more than that...

    Houses that are in need of a pretty serious renovation are selling for $180 in the area. Houses that have been renovated are selling for $250 and up.

    If I can get the house for the $136,000 plus the $10,00 in equity at closing (not out of my pocket - part of the contract that an investor purchases from me), I think there is enough room for us both to make money.

    I'm just not sure how much to sell this contact for (if I get it).

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