Possible first deal!!! must act quick!! - Posted by Frank (FL)
Posted by Frank (FL) on August 12, 2005 at 15:55:14:
It has been no more than two months since I have started to educate myself on Real Estate. I have posted this before here, that I left my job as an assistant stock broker, to become fully dedicated to multiple aspects of RE. The new development is that I passed my RE license exam on July 28th, and am now employed for Century 21, here in Weston, FL. I am ready to start investing too!!
I got my RE license, for one reason, and that reason proved to be correct today, on my second day of trainning: RESOURCES FOR POTENTIAL DEALS. I was speaking to a veteran agent today, and he told me of a listing that just came up, for a rehab property. I jumped the gun right away, and went out to look at the property. Here are the details:
The property is listed for $225k. Comps around the area have sold in May of this year, from $277k to $385k. I estimate that this property is worth at least $300k. It is in Fort Lauderdale, yet the neighborhood is not that good. Just to note, I looked at the tax record for the property, and the last sale price shows only $100. I don’t know what kind of creative deal the owner made, but that’s what it shows.
The owner is also an investor, and his tenant left the property, and he fell behind in his payments to the bank for one month. He needs to close fast! I spoke to the listing agent, and in true South Florida market fasion, he has already received and is going back and forward a couple of offers at listing price. I am not in a position to negotiate down the price, or to offer an all cash deal. My dad will be the actual buyer of the property, and would need financing to afford the house. By the way, I would make a nice little commission off the bat as the selling agent, aside from any profit from the investment.
The house needs several things to fix up. A/C, paint, some windows, the small kitchen redone, work on the drive-way, but the main thing that worries me is the roof. The structure was built in 1956, so the house is old. I want to make sure I include the contingency for inspection, before we do anything. Since I am a newbie, my rough estimate for the work is $20k to $25k. This would still give me a profit of around $50k, without including closing costs, or the mortgage payment in arrears.
Obviously, in this market, a quick close, and an all cash deal would give me and my offer a better chance. But I was trying to come up with something that would fit my situation, and help the seller. So I would appreciate your opinion on what I should do.
I was thinking of trying for a sub2 deal, and increasing the offer price $5k or $10k to make the offer more lucrative. With this, I could pay his late payment, assume his payments, or pay him a few months in advance, fix the house, and resell it for a profit. It would be contingent to a 5-day inspection period, and could close soon.
What do you guys think? Obviously, since I am new, I am hungry for money and deals. If I am looking to make a $20k profit, I would still go for it, at least to gain experience (don’t want it to be bad experience though).
Any advice would be appreciated, as it would help me take off in my investing career.
P.S. The guy is also selling a duplex a few blocks from there for $309k, and comps are around $350k. Obviously the investor may be running low on cash flow. I’ll be looking at that one tomorrow!!