Changing Horses in the middle… - Posted by singledad
Posted by singledad on August 16, 2001 at 13:16:03:
I came back from the Atlanta convention charged up and ready to do some deals. In late April I entered into an agreement to lease/option a property starting in August of this year.
At the time the property looked to be in fairly good shape but when the seller vacated, I discovered to my horror that the place is going to need at least 5K to make it look decent (painting, flooring, new kitchen counter, new bathroom sink, bathroom tiles and floor need to be repaired etc. The work is currently being done now.
To make matters worse, I gave the seller $1500 at the time I took possession.
The numbers?
Mtg balance 94K
to seller 3K 1500 at possession, 1500 when prop is sold
rehabs costs 5K
carrying costs 2k
Total = $110,000
Monthly mtg payments are $890.00.
The ARV on this hummer is around 115,000 give or take a few thousand. I can clearly see, that this deal was too skinny to do a lease option. First off, the method that I used to determine the ARV was flawed in my first analysis, I thought the ARV was 125 when in fact it is really 115. (Rookie mistake) and these repairs that I didn’t factor in makes a bad situation worse.
Last night when the reality set in that I may not make any money at all on this deal or just make a few dollars, I thought,
“hey the seller has a VA loan why don’t I get him to agree to void the L/o, and enter into a Contract for Deed, (per Bronchick, taking a CFD on a VA loan will not trigger the DOS) then offer owner financing where I could get most of my cash back and get some type of monthly spread and sell this property at 125,000 or so instead of $115,000.”
I am sure that the seller would go for the conversion from l/o to cfd but when you take a property cfd do you have to actually do a closing and pay closing costs? The repairs should be completed by early next week and I have to start paying the note in September, (yes, I know, I screwed that up too, should have gotten the seller to pay for August and Sept and maybe Oct. too).
I would appreciate any thoughts from those expereinced in these matters. As tempting as it may be for some to insult or riducule me for my mistakes, I ask you to please refraim and just submit useful info be it critical or not.
Thank you.