Posted by Sean on April 08, 2002 at 19:14:38:
Rick has a good idea about the hard money. Also, why don’t you just find an end buyer for the property at 80-85% and let them do all the work. You will get your money a lot quicker without the headache of relying on someone else. Too risky. Take the money and run to the next deal. Then when you’ve built some capital, you can fund the rehab. Always control it if you can.
Simultaneous closing / rehab costs - Posted by Harold
Posted by Harold on April 07, 2002 at 16:04:00:
After months of reading, researching, and cruising the archives here at CRE I’m ready to get started. I’ve been concentrating mostly on flips and abandoned properties and I have come up with what (in theory) sounds like a good idea. The only problem now is finding a contractor that will agree with me.
My idea is this; I want to find a property and place it under contract (with a closing in 60 or 90 days for example)during which time I will get estimates done and have any needed repair work completed. I will also market the house for sale during that time and go to a simultaneous closing with my seller and my buyer. The contractor will be paid by the closing attorney at the settlement table before I take my share. The goocher is this, I don’t know how much luck I will have convincing a contractor to allow me to defer his payment until the deal is closed but this seems like the only solution for me, since I just got married and have absolutely NO rehab capital.
If anyone out there has any thoughts or opinions on this, please share, I’m looking forward to any advise I can get.
Thank you all in advance for your help
-Harold
PS - if anyone here is a contractor in Delaware and would like to participate in this I’m VERY anxious to hear from you. lol
Re: Simultaneous closing / rehab costs - Posted by JoeS
Posted by JoeS on April 07, 2002 at 17:48:35:
Here are some challenges to your slant. I agree it seems like it will work, but consider. You could have a contractor trust you for the work. You could sign a promissory note with him so that you personally guarantee it. You could add him as a lien holder, but you do not own the property yet. The current owner may or may not allow you to do any work (liability).
A way around it would be to partner with the contractor. This way you will make less profits, but still profit nonetheless. Hope this helps.
Re: Simultaneous closing / rehab costs - Posted by Rick_SC
Posted by Rick_SC on April 07, 2002 at 21:15:51:
Another concern is that you do not own the house. I like your creativity, but you are putting trust in your seller that he will not pull out of the deal AFTER ALL THE WORK IS DONE.
If you can qualify, a better option would be to make an offer low enuff that you can obtain the purchase price and rehab money (in draws) from a hard money lender or private lender.
My $.02 worth…lol.
Best investing !!
Rick