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Good Morning Everyone,
This is my first post and I look forward to learning from everyone in this community.
-Military family purchased a SFR in 2017 for $385,000 and wants $430,000. They primarily want to sell, but only have 19 days to sell it before they leave town. They are prepared to rent the residence if necessary. They will rent it for $2600 and need $2450 a month to break even on their mortgage, insurance etc.
-They put $30k in rehab into the property in order to add two bedrooms.
-The property is a 5/2 1/2, has a pool and a large back yard.
They are moving across the country and may not have the means to manage the property long distance.
-Just wanted to canvas the group to see what options they have. I offered to lease his property on a performance basis and he seemed to like that idea but still wants to sell. I would love to solve this real estate problem for them. I think it might be in his best interest to hold the property instead of selling now. I considered taking over the mortgage but, it wont cash-flow enough to make that a good investment for me.
He said he has no idea what he will do with the proceeds at sale.
Paul, location is even more critical than ever in this case. There are over 400 locations including both operating and even closed military bases with found (or suspected) drinking water contamination from decades of dangerous firefighting chemicals that were never cleaned up. I hope the property you’re considering was not in such an area, but you’ll have to do the research to find out.
Secondly, 19 days is a very short fuse. This house might be a good candidate for a highest bidder sale, but if you’ve never done one, this might be better served by bringing in somebody with some experience to run such a sale — while you watch, help, and learn from it. (The odds of a traditional realtor’s MLS listing being useful in that ultra-short time are about zilch.)
Third, in the event that a sale either isn’t feasible in that short fuse calendar, or fails to happen, the house might be a reasonable candidate for an experienced local person to manage via master leasing. You’d have to disclose the general area in order to learn whether there’s a practiced master leasing person nearby.
Fourth, if there’s no practiced and local master leasing person found, there’s always the “hold your nose and use a traditional property management company” approach for the house. Whether master leasing or traditional property management, neither will generate the cash for a replacement property purchase for that family — which could mean they might be forced to rent as long as this house doesn’t get sold, and that could be years.
Those are the obvious alternatives that come to mind. Anyone with more insightful possibilities is welcome to chime in.
Thanks Dee! Yes we proposed master Leasing and they were open to it. Thanks for the heads up on the environmental issues as well. Highest bidder sale sounds like a good option as well. Thanks again!
I would not want to own or master lease this one. Even with a performance lease, I’d hate to get stuck with $2400 a month payments. And hate to have the seller screaming at me if I could not get it rented for a month or two.
Instead, this is what I’d do
Do a Highest Bidder Sale for the highest down payment. You could pull this off in a week! Asking price is $435.,000. Minimum down payment is $7500 ( low to get a lot of people to the house). Bidders will probably bid the down payment up to $40,000 maybe more. STRESS the No Bank Financing Needed angle to get buyers coming out of the woodwork
Write up an agreement that you get 50% of the down payment.
You have these additional options
1. Buyer makes payments to you. You pay the underlying loan. You get to keep the difference.
2. Buyer makes payments to the seller. They pay the underlying loan. They get to keep cash flow
3. If no cash flow – buyer makes payments directly to the lender.
You can get in and out of this one in about 1-2 weeks – walking away with $20,000 —and not have any long term commitments for such a high payment.
We have a ton of training for doing a Highest Bidder Sale here at CashFlowDepot.
Let us know what you do.
Thank you Jackie!
Here are our questions:
1) What if the sellers already have an agent? Can they fire their agent and use us to do a Highest Bidder Sale? We are not agents.
2)The homeowner still has a loan on the house. If we are doing a HBS for the down payment, how can we negotiate the downpayment? Doesn’t the lender dictate the buyers downpayment?
3). Can you explain No Ban Financing?
My wife and I are going to read your book this morning and hopefully talk to the sellers today.
answers to your questions
1. if there is an agent involved, I would not get involved.
The seller needs to read their listing agreement. They may be able to get out of the listing agreement if the agent has not done an adequate job of marketing the property. The sellers may be obligated to pay some commission anyway.
2. When selling with seller financing, the objective would be to WRAP the underlying loan ( buying subject-to the mortgage). So, the lender is not involved in saying ok to the buyer or how much the down payment needs to be. Study the section on Seller Financing and Subject To to understand the mechanics.
When you sell using the Highest Bidder Sale method – for the highest down payment – the buyers will bid up how much the down payment is. You need to do proper marketing (described in the training at cashflowdepot highest bidder sale section) to get a LOT of potential buyers to the two day pen house where the buyers submit bids. They fill out a bid sheet with how much they are willing to put down. The more people you get to the open house, the higher the bids will go. I can usually get 20% down selling this way.
3. typo– should have said No Bank Financing.
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