how to structure foreclosure for flipping? gurus welcome
Hi,
I have a house in mind going in pre-forclosure. The owner owes $32,000 on the first mortgage and $10,000 on a second mortage. House is worth $80K. I can get the house for $60K. How do I structure the deal for flipping to another investors?
Your numbers aren't good enough to flip to another investor as I see it.
You say the house is worth $80K and you can get it for $60K, how much were YOU thinking of making on this? A rehabber will want a minimum of $20K spread on a minor fix.
You would need to get that house for $50K, take an assignment fee of $2 to $5K and then you could assign your contract, or wholesale it.
I just did one this week.
Bought the house for $115K it's worth $147K, and I flipped it for $122K.
I made $7K and the rehabber will have $25K to deal with. House only needs about $5K worth of work.
Remember, the rehabber has to think about repair costs, holding costs, closing costs when buying and selling and any misc costs.
Get your property for $50K and you will probably be able to flip it.
Just my thoughts.
Kristy-AZ
[addsig]
Why $60K? Why $50K? Seller is losing their house to foreclosure, is the extra $18K there for a reason? If you buy for $60K, you may have extra costs running you up to $65K. (Roughly) Does house need repairs? Can you offer the seller, say $45K do help them move? You are in control of the situation if you're the money man in the transaction. Give yourself more room and others will jump on your flip and you make a nice profit too! Good Luck!