It depends…
it depends…
Where you are in this game… where you are financially…
The structure of the deal is important… and if you are just
starting… IT"S HUGE…
For instance… get it under contract… leaving the loan
in place temporarily until you get it rehabbed and resold…
That’s 240k you don’t have to come up with…
The seller wants 150k… Your job is to always separate a sellers
needs from their wants… and then negotiate from their…
If you negotiate that to say 100k… then your next negotiation
is how its going to be paid…
The seller has a problem house… you are there to provide solutions…
otherwise… the seller will never see any of there equity turned into
profit…
First thing to learn… Equity. ISN"T REAL…
We as investors learn to make equity real by either making it cashflow
or by turning it into cash…
So, back to… how its going to be paid… why not pay it on the
back… 100k due in the future when the property is cashed out with
a New Loan…
Then you find someone that wants to Fix it and live in it… or rehab it yourself…
Me I always look for the retail sale… so my exits would be…
if it needs 75k in work… I would typically price a house like that… at
$475,000 with owner financing… get a huge chunk down…
And wrap the whole thing with a note and deed and trust and have a
great cashflow with them refinancing in the future…
Think getting 50k down…
Your owed $425k and you owe… $340k… cashflowing likely over a $1,000/month…
or… assign the whole deal to an experienced rehabber… and pick up some
cash on both the front and back end of the deal…
A deal with a 150k spread… might be worth… 25k and then walk away…
IMHO… there is more money to be made in this business flipping paper and using knowledge than… swinging a hammer (or controlling those that do).