Here are a couple deals I got last week ( long) - Posted by Mark-NC
Posted by Mark-NC on October 15, 2000 at 13:50:02:
I liked Brian Renfrows posting he did a while back with the deals that he had Compleated. I thought I would give it a different twist and tell you about a couple deals that I have put contracts on last week and give you an idea what my game plan for them is.
Now mine don’t the have the nice photo’s attached like Brians, but if anyone is interested or curious I will email them the photo’s of both deals.
Both of these properties were obtained from an REO list from a lending Institution that I have developed a relationship with over the last couple years when I was heavily involved in the Note Business.
Any way the first one Is located in Cherryville NC. It sat in the Reo Dept for a while. It was originally listed for $43,000. It is a small duplex single bedroom per side. Each side will rent for $350. It’s in a nice area not a war zone.
The outside was recently painted and it has a new roof. It looked like someone bought it to rehab it and lost it to foreclosure. They did remove the kitchens( about an 8’ run),stove, hot water heater and space heater on both sides. This is all it needs execept for a few miscellaneous repairs and cleaning. It can be put back together for about $5000. After checking the comps It will have an after repair value of $47,000.
It was turned over to a realtor but the agent was not very diligent in marketing it. It wasn’t even put in the MLS system. I wouldn’t have found it unless I got the REO List.
The price went all the way down to $27,500.while the realtor had it. The listing was expired when I found it. Any way after negotiating a little I got it under contract for $20,000.with no earnest money and close in 30 days.
My objective is to move this thing fast and get rid of it before I have to use any of my money.
Because it is an hour away from me I prefer to Wholesale it. But I will Rehab it if the right buyer comes along(As explained below in my second option).
The day my offer was accepted I put an ad in the paper and a FOR SALE sign in the yard.
My ad Reads;
Small 2 family, excellent investment, $300 to $400 per month cash flow possible, needs 5k of minor work, SELLING CHEAP $26,000 cash and you repair. If I repair $45,000. with flexible financing. Will appraise for $47,000 Repaired, Won’t last, call 555-5555
I am also taking this to my REI meeting next thursday. There are a few wholesale buyers in the orginization.
My selling stratigies are.
1.) I would prefer to whole sale it and move on.
2.) Because I have enough room on this I can sell to an 80% buyer make some cash and hold paper. My goal is to fund the deal and the rehab with my buyers money. With a very creative Mortgage broker I work with. (By the way we do have a working relationship).
Here is how it works; we will get an appraisal on the property subject to repairs. I am going to flip it to my buyer at closing for the after repaired Value.
My Mortgage Broker uses a warehouse line to fund their deals, then they have 30 days untill they sell them to the lender. We use this 30 day interem to get the work done. So what we do is close the deal, pay off my contract to the bank, leave out enough for rehab and the rest( my profit ) is held in escrow untill it is repaired. Once it is Repaired the appraiser goes back out confirms the repairs and my money is released. My brokers package is complete and he can sell it to the lender.
I tell my seller that that the only way I will hold the paper is if they will let us close it like this.If they buyer balks a little we may offer to make the first payment.
We will only do this type of deal if we can get the repairs done in a couple weeks.
Although my Broker Charges Me 4 points it is much cheaper than using hard money and there are no holding costs this way.
If I do it this way I will not have used any of my money at all I will put cash in my pocket and walk away with a second Mtg.
3.) If the first 2 strategies do not work I will buy it with hard money.
The Next deal;
Here is another property off the same list. This one is in Bessimer City NC. This is an excellent deal. I got ahold of this one before it even made it to the assigned realtor.
After doing some research I found out the loan that went into default on this was for $68,000. They at the time were going to list it for $47,500. Still a deal at that number. Any way they were trying to decide if they wanted to spend some money on it to clean it up. I told them Don’t bother I would take it as is. After going back and forth for a week I got an offer accepted of $41,000. close in 30 days with no earnest money.
The home is about 15 years old and the exact same home next door from the same builder sold 9 months ago for $72,000. There’s my comp, Close enough!
All it needs is; The Yard is over grown, it needs carpet, and paint on the outside, a few minor repairs and that’s it.
$3,500. will easily take care of this.
I will sell this one quick. There is enough room for an 80% buyer and hold paper, they are a dime a dozen and they are only to eager to work with you if you are flexible with the financing and you can get them in a home.
I will sell it with the same senario as my number 2 example on the first deal. I may even get the buyer to paint the out side after close for sweat equity who Knows. I will see what happens when the calls start comming in.
Well thats it, I will let you know what happens.
Mark