Is this a Deal?

[LadyDeal]

Hello,

I just wanted to check with some other investors and see what they think about this:
I have a property which MV is 235K; I can hold the contract for 163K needs to pay 3% to realtor for a total of 167,890K. I am planning on getting out of this deal 10K and property is in good shape but needs around 20K to be pristine so total acquisition for investor is: 187,890K for a profit of 37K. Can someone tell me how - in God’s heaven- is this a Bad deal?
 In my mind if you can make 37K ARV I will not say NO to this amount of money in a property that is greatly located.

Am I wrong on this?
or this is not a deal at all!

[NoTiceViCtor]

I think for the investor it might be a little too risky coming in at that price unless he has very good exit strategy. He will come in at 80 cents on the dollar if I am understanding this, right? Even on a hot market it will be risky, but you'll be making a great transaction.

[LadyDeal]

Yes, you are correct on that! it is .80 and will in a sense be a little risky for the investor but, I still think by not being the greatest deal, as we all wish to always have .30 cents on a $, this particular one can go really fast so from that stand point the Investment along was worth it.

I am still a newbie and I just try to understand things and it didn't make sense to me to pass on this but other people disagreed with me and I need to know if I was right or wrong!

[jmd_forest]

It might not be such a good deal when the following risks are analyzed and applied:

1) The estimated MV may not be quite as high as you think it is.
2) The estimated rehab costs may not be as low as you think they are
3) The market where this property is located may be depressed resulting in higher than expected holding costs which, from what I could see were not addressed in your calculations.
4) The investors selling cost could be as high as $14.5K (6% on your estimated MV of $235K)

jmd_forest

[davewindsor]

Hello,

I just wanted to check with some other investors and see what they think about this:
I have a property which MV is 235K; I can hold the contract for 163K needs to pay 3% to realtor for a total of 167,890K. I am planning on getting out of this deal 10K and property is in good shape but needs around 20K to be pristine so total acquisition for investor is: 187,890K for a profit of 37K. Can someone tell me how - in God’s heaven- is this a Bad deal?
 In my mind if you can make 37K ARV I will not say NO to this amount of money in a property that is greatly located.

Am I wrong on this?
or this is not a deal at all!

Here's what I would do if I had doubt about whether this is a deal.  I would go to a dozen houses for sale on the street and in that neighbourhood and find out what they are selling for and what condition and size they are in to determine if $235K was a realistic price to relist it for.  Don't be a leader in setting prices.  If I am still in doubt, I would knock on a couple neighbour's doors and ask them what they think of this house and what they think its worth. I'm sure many of them have been inside the house too out of curiousity of what they're own house is worth.  If it's lower than what they are asking, ask them why they think so.   Do the comps and get some neighbour's opinion's.  If these two sources back it, put an offer down conditional on the results of a home inspection and financing.

[Summit]

I just wrote the coolest post for you then I timed out and it would not post all that work down the drain! Anyway sell it at $235,000 and carry 20% I will re-post the long version sometime.

[LadyDeal]

Please do!, I would like to see the details on this and I Know you can have a good one.

[MichaelQuarles]

Good to meet you...

Let me throw one at you....

If you can contract it for 163000... Please do... But dont wholesale it... Sell it... Put it on the market with the agent and relist that darn thing... Pay a double commission... who cares... If all you were wanting is 10k then sell it for 210k pay 10 percent in cost and 3% to the buyer for closing cost and make twice that and do the deal yourself... With FHA out of the way on seasoning and buyers having the ability to use the 203K it doesn't make a lot of sense not to do it yourself... Whats the worst thing that can happen?

double your money maybe more....

Good luck

Michael

[davewindsor]

Yes, you are correct on that! it is .80 and will in a sense be a little risky for the investor but, I still think by not being the greatest deal, as we all wish to always have .30 cents on a $, this particular one can go really fast so from that stand point the Investment along was worth it.

I am still a newbie and I just try to understand things and it didn't make sense to me to pass on this but other people disagreed with me and I need to know if I was right or wrong!

Would you quit acting like a flakey schoolgirl and put in your offer already and report back to us that it's done.  It sounds like a good deal and you won't get anywhere in life if you keep procrastinating like this.

[ReCoachDennis]

[color=yellow]hey there.

On its face it looks like you may be able to do something.
But as was pointed out here already, you can do absolutely nothing until you have
had what the legal eagles say "meeting of the minds" and have reduced that in writing as a contract.

No matter what you decide to do buy and sell, wholesale etc.  remember to protect yourself by giving yourself an 'inspection' period via an option to back out of the contract should your numbers not be completely what you expected.

This way, you're only risking that option fee (possibly $10 or whatever you can negotiate)
which can give you several days or even a few weeks where you can make sure your numbers (ARV- repairs, holding costs, etc) are good.

Let me know if I can help.
You can also get my property analyzer for free on my website.

thanks!
Dennis[/color]

[LadyDeal]

Michael good to meet you as well,

I love the idea of making this deal double for me but, how do I gain that much time to re-list the property without sacrificing money? do I have a particular clause that will give me a sweet exit out of this without compromise.

[JohnSchroeder]

really depends on your cash position and the financing available to you.

find another house for sale in the area "from an investor" and grab a quick option from them.

post it on craigslist and see if anyone calls you.

remember, no one is paying retail right now and financing is even more tricky.