First Deal! I Need HELP!!!
The owner is willing to sell for what he owes. Which is $80,000. Comps are $85K to $100K. His appraisal is $84K a year ago, but he then put in a new driveway. But it also needs a new roof now. He has 2 mortgages on it total payments of $700 a month. Other than the roof the house is excellent condition. What should I do?
I`d say find out how much will the new roof cost you.
That is probably around 2-5k, so you are already spending money to fix it and you must fix the roof to sell the house, AS IS will not work.
Weigh all PRO and CONTRA, talk to contractors or people who know the repair cost and figure out yourself.
Plus what is the average time house sits on the market with conventional financing?
And comps 85k-100k are very wide spread, try to narrow your comp properties, call realtors in the area, ask what will it take you to sell this house with such problems.
This is pretty much analysis of the numbers game: if the market is hot in the area - go for it, if not - think twice about holding costs and repairs.
What is your exit strategy if your payment is due and you`re not willing to make it?
The roof will cost me about $1500. As for an exit , I never thought about it. But property in that area usually sells in 2 to 4 months.
Would you suggest a sub2 first payment due in sixty days?
just ask the seller if thats ok.
or just ask them what will they do two months from now if the house doesn` sell? create a win-win situation, try an option for your first deal: either you sell it or they sell what is the matter.
PS: strongly urge you - dont spend money, especially on the first deal!
Younger,
You need to take a step back.
Look at the full life-cycle for the deal.
1. How will you get into the deal? This is mostly what you have worked on.
2. How will you cover the needed repairs or other things before selling or renting? Maybe you can sell as-is, etc. You need a plan. If it takes X months how will you cover the costs until then?
3. Exit. What options make sense? How would you price them? How do you find a buyer, renter, investor, etc?
You need a plan A with at lest a B and C version in case something happens that you were not expecting. Getting into the deal is sometimes the easy part. Coming out the other side without losing your shirt might be an entirely different matter. Not like it has to be difficult. You just do not have any idea of what you will be doing to make the deal complete and you should before you buy.
John
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