I really don’t want to tell you how to make a decision. I will tell you that If I’m going to the bank at all for money or any significant amount of my own cash into it then I’m definately going to want a much below market sales price. Why? Because when I don’t have to go to a seller for a significant amount of financing then I can get a better price if the seller is motivated enough. Otherwise I’ll forego putting up cash or borrowing elsewhere until I’m dealing with a motivated seller.
If I can get the seller to finance the deal without a big cash outlay on my part, then any positive cashflow or backend profit is great. As long as little comes out of my pocket and I don’t have to spend a lot of time with it then I’ll do it.
In both cases the seller is always motivated and I’m getting the best deal possible.
I’ve found a vacant 3/1 FSBO in move in shape and have talked with the owner who owes $0 on the property. He had it on the market with a realtor for 3 months at $92K and now has a listed the price of $89.9K. Since I’m very new to all this and I pass by the house each day I went for a look. When I was there he said he could let it go for $86K. I asked him what he was going to do with the money and he said he likes the stock market. Does anyone have ideas on what the best strategy for buying this property might be?
First find out what the Market Value is and plan what you’re going to do with it.
Are you going to hold it and rent it out, flip it, carry paper. Whatever you plan on doing with it you need to learn a little about the market it’s in, and what you can rent or sell it for etc. You factor in all of your expenses and the profit or cash flow or return you expect and then you make an offer.
Before you bother with any of that it’s a good idea to determine this sellers level of motivation. He said he’s willing to let it go for $89.9K, that could be more than it’s market value for all that you know. Don’t work an offer around what he wants. You have to determine what you want and how you can get it. Then compare it to what the seller needs. That’s when negotiation begins.
Here’s what I have in mind.
I think the FMV is in the 85K range. I would offer 80K with the seller taking back a 20K 2nd and get a 75% LTV leaving me with some cash. The home will rent for $750 per month leaving a small positve cash flow. I was planning to offer the property on a L/O at $90K. What do you think???