Posted by Rose on March 19, 2001 at 24:19:14:
I hope this is the right place to post this message.
I finally met the owner to see his house which is going to be in foreclosure soon. Next two houses to his house had realestate signs by the same agent, one of them had a sold sign on it. I called the number to check market. She is nice and gave me good information about the neighborhood market. The house sold for $170,000 (better quality) was in the market for 4 weeks. Another one sold for $156,000 2 days ago, it was REO was in the market for 6 months. She had another listing 3 blocks down the street sold with in 3 weeks. (Kind of similar houses.)
She also did a market analysis on this preforeclosure house 4 months ago, for $156,000. He is several months behind payments, owes $130,000 on the house to a financial co. As far as I know no other liens against the preforeclosure house.
Real estate agent told me she will do market analysis, rental vacancies rate, rental price, title search. In other wards she will do all that for me and all realestate paperwork for $1,000 and help me to buy this house for $130,000 and suggests to pay the owner few thousand ($2,000) to help him move out.
I am not comfotable doing the paper work by my self since I am so new to the REI. Can I trust the realestate agent to take care of this for me?
I found the preforeclosure through owner because he is looking for someone to buy his house and lease back to him. I don’t think he can afford to stay there with his income. I would like to meet his terms, but as a investor it wouldn’t be fair for me or for him if I let him stay there. (if he stays there, I would loose rest of the equity in the house very soon.) I have confidence that if I go with the real-estate agent and make my deal (pay the owner $2,000 Moving + 1month rent) I might be able to get this house. Am I being fair to the owner by doing this??
My total expenses might be:
Buying the house for $130,000
Realestate agent : 1,000
To owner : 2,000
Fix up costs : 5,000
My new loan : 145,000 (I will have my own financing)
above expenses :-138,000
Cash at closing : 7,000
Market value : 170,000 (after fixing it up)
My mortage : 145,000
profits at flip time: $35,000
My total profits $42,000 (35K+7K, I am not sure what it costs me to sell/flip the house at this time…these are estimations.) I know I need to deduct someother costs from $42k. I may also deduct closing costs on my financing. Still…who will resist this??
I learned these calculations/cash analysis by studying Carleton sheets program and from reading messages on this board. How many of you encourage me to go on this deal??
Anyone see any concerns??? issues?? I am beginning to feel really proud of myself for spending my spare time on this for last two weeks. I am getting close to this deal to make an offer. Anything I need to be really concerned about laws in Washignton state about preforeclosure deal like this??
If any one see anything differently please…please let me know. I appreciate your input and thanks a lot for so many smart investors on this board who helped me a lot by posting their success stories and responding to my messages.