What To Offer
I looked at house last week that is being rehabbed and will be ready in two weeks. The seller originally said he wanted 100k minimum. The house comps out at about $110k. I told him there is no way I can buy it for that and make a profit. He still seemed interested. I am planning on offering 75k. What can I do to make him realize selling to me is a good idea. I think the biggest thing I can offer is a fast sale. There are no liens on the property at all so he has room to deal.
Also what constitutes a fast sale? I think I could get financing thru my bank or hard money in 30 days. Is that fast enough to be a benefit? Do I write the contract to say closing takes place in or about 30 days? Thanks.
Not sure if closing in 30 days is all that fast for him, not sure of your market times to close but 15 days, which is doable if you have some of your ducks already in a row already, would probably be more appealing to him. Also, with your 75K offer he can do one of three things: accept, reject, or counter. You don't have anything to lose with lowballing an offer. There are other properties out there.
Q
I would be careful. I think I would try to figure why this rehabber is willing to discount this property anyway. Maybe there are some issues that you are unaware of. Not to discourage you. Please always make an offer. He can only say no. If he sells at a discount to you he is esentially giving up on this property and the time he put in rehabbing it, unless he bought it really cheap and did repairs cheaply too. Basically find out his motivation for selling to you. It could be a good deal.
Find out how much $$ he has spend in repairs. Get a loan to pay him what he's paid out of his pocket to rehab. (I bet that money he has recently spent for rehab he's going to want out right away)
Since he owns the property free and clear have him carry a second for the remaining purchase price @ 4%. That to me sounds like a good deal. Or, give him closer to his full price ,pay him interest only for the remaining balance for a short time and cash him out when you sell. Many ways to structure a free and clear property. Just remember use terms to your advantage.
**my disclaimer** I'm new to this wholesale REI so take my advice with a grain of sand
I think you are all missing the point. The poster is looking for a way to get the rehabber down.
As a rehabber I would suggest passing on this property. There will not be enough profit for you on this unless you can rent it profitably and keep it as a long hold.
[addsig]
Everyone is assuming it was bought to rehab and sale for a profit. This may not be the case. The seller may have owned for years and wanted to sell now and figured the best way was to rehab and sell. May very well take the offer and be really motovated. Best way to find out hou motovated is to make the offer and see
Good LUCK and Thank You
Hope this helps some
Ted Jr
[quote]
On 2004-01-23 19:15, telemon wrote:
I think you are all missing the point. The poster is looking for a way to get the rehabber down.
As a rehabber I would suggest passing on this property. There will not be enough profit for you on this unless you can rent it profitably and keep it as a long hold.
[quote]
What I was suggesting was if he's going to offer him 75k, structure it so the owner carries some paper( i.e. Owner put 15k in repairs, give him the 15k and have him carry the 60k.) In no way was I suggesting the he give the seller what he was asking.
While your presenting the offer ask the sell what he would do with the proceeds if the sale of the house was paid in lump sum. If he's not sure , well then you have a great intro on him carrying a second and making 4% on it. I'm not sure if this seller lives in the property or not ,but you can go on to explain the benefits of not paying capital gains on a lump sum at one time if it's not his primary residence, which will make the large carry 2nd more attractive. Just some ideas <IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by captain72 on Date 01/23/2004 ]
Just because a house is for sale or you know somebody is selling a house, doesnt mean it is a good deal. So many people get cought up in that. First you have to find a motivated seller.
The word "motivated" should be replaced with "NEGOCIABLE". People are "motivated" all the time, but if they are NOT negociable you have nothing.
In every sales transaction known to man, you first have find out what one needs
If you cannot get to that base line then you cannot appeal to their decision making trigger.
_________________
B.G. & Wheeler D. LLc Inc. and Trust
(A division of: Half Vast Enterprises)
"Most american millionairs today (about 80%) are first generation rich"[ Edited by WheelerDealer on Date 01/23/2004 ]
Ok thanks everyone.
This guy owns the place free and clear. He bought it just to rehab. He owes a private investor $70,000 she lent him to buy and rehab it. I presume he did not use the whole 70k on this and wants enough to pay the investor off and make as much as he can. Thats where I came up with 75k. 70k for his investor and 5k for him, assuming he is in it for less.
there will be closing costs and transfer costs, unless you live in a state where they don't charge transfer taxes or deed recordings?