Newbie.. Need Help.. Possible Deal..

[hubbard316]

I am a new investor trying to get started in the RE Investment business. I have a deal in the works that I want to move on. The problem is that I have no idea on how to structure it to make it work for me and an investor. Here are the details:

- 2 BR 1 BA home
- 1170 sq. ft
- Owes approx. $67k
- Approx. value via comps $58-$65k
- Tax rolls $67k
- No major repairs needed (new paint inside; change door locks; new carpet)
- Owner looking for $3k cash and subject to financing

How can I arrange this deal to make it feasiable for an investor to pick it up from me via an assignment? I want to flip this deal to another investor but I am totally loss as to how I can structure it. Please help!!!

[Randy (SELA)]

If the owner owes $67k, and the house is worth $58-65k, where's the beef? Did you mean $158-165k? Maybe you can lease-option

[hubbard316]

I know what you mean. There lies my problem. I am trying to find a deal here that works. What can you suggest that I offer him? Any creative financing ideas or options?

[Dan Auito]

Pass on this one is my advice. There is no margin for profit here! Sure someone could buy it and offer owner financing at an inflated price but this one just doesn't have any margin at all. Build in at least a 20% profit margin on your deals or you'll find that you'll lose money more often than not! PASS!!!

[Randy (SELA)]

What Dan said. If there's no profit, there's no deal

[Aldo]

I want to flip this deal to another investor but I am totally loss as to how I can structure it.
The short answer is that you can't. I have a reputation for sometimes being brutally honest and I half-heartedly apologize for that. With that said, I'd advise replacing the batteries in your thinking cap. LOL

The seller wants $70K ($67K for note satisfaction and $3K in fun money) for a property worth thousands less than that. You want to flip the property. Even if you only want to net $5K on the deal, the buyer hasn't been born yet who will pay $75K for a property worth Approx. value via comps $58-$65k.

No disrespect is intended here, but you really need to spend more time looking at the numbers.

[LEE - LJ]

Hubbard --

A deal is considered anything that you can get at a discount. Ofcourse the discount must satisfy all parties involved. When you buy a car, clothes, food or any other item, if you pay retail/market value for it is that a deal?

A real estate deal is the same.

You must be able to get a property at a discount and your exit strategy should determine the amount.

If the value of comps are 58k-65k, then to cashflow the property as an landlord your purchase price should be 80% of comps in the area or lower.

A rehabber's purchase price is around 65% of ARV or lower.

A wholesaler's purchase price is anywhere from 50% on down.

Remember the actual purchase price is subject to an individuals tolerance/abilities and expectations to make a profit.

LEE

[Randy (SELA)]

On the other hand, if you could rent it out for $1000/month, that's another story

[craigfial]

Being new is a learning experience. You have heard from the masses and all agree, this is a "PASS". Be glad you had the sense to bounce the idea off people who have been there done that. Your on the right track and commend you for your efforts.
I recently had a situation of a friend that was going to loose their house to forclosure. Unfortunatley they did not have the sense to sell it to me for what they owed and be glad they avoided forclosure. Sometimes you can lead a horse to water but you know...
Even at what they owed, it would have been difficult to make the deal work, as there was only about $25K in equity and leasing the house would not cover the expenses. Selling would take a while. So even with $25k it would have been a difficult deal to make work. Strange as it may seem, the bank is allowing them to remain in the house until it is sold.