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Hi Brian
Welcome to the CashFlowDepot family.
Before you attempt to negotiate a package deal option, it would be better to start with several ONE house option deals. Getting the deal is only half the battle, you also need to have a clear exit strategy (or two) planned before you get in to a deal.
If you get an option on one house that needs a lot of work, and your option is well below market, you can wholesale flip to a rehabber or do a highest bidder sale. But you really need a buyer’s list before you do flip it. A highest bidder sale will help you build a buyer’s list.
If you get an option on a nice house that does not need much work, you could sell your option to someone, do a highest bidder sale if your strike price is low enough, or you could sell with owner financing or do a lease option if you plan to take title once you find your buyer.
If you got an option, even with no money down, on a package deal of 20 properties, what would your exit strategy be? You need to think it through.
By starting with an option on many one house deals, it will give you experience in learning the market, experience with negotiating, and the confidence you need to take on a package deal.
But jumping right in to a package or portfolio deal if that is your first deal, would not be a good idea.
Study the section on Negotiating. The strategies apply whether you are doing a single property or a package deal. The only thing that changes is the exit strategy.
Anyone else have input?
Some other things to take in to consideration when negotiating any deal, single house deal or a package deal…
If the property conditions are really bad then of course you need to get a much lower price so you can wholesale to a rehabber. Read the FLIP DEALS book in the new member bonus section to learn more.
If the property condition is not so bad, then you could sell to a retail buyer or landlord who will keep the property as a rental. But the terms become even more important. Instead of negotiating a lower price, it is better to get better terms, like buying subject-to or with seller financing so that you can pass those terms on to your buyer or stay in the middle of the deal with a wrap. With a wrap, you will get paid when you sell, get paid every month and get paid again when they cash you out. If you just sell your contract, you get paid one time then you have to go find more deals to get paid again.
All of these things start with a REALLY MOTIVATED SELLER. If the seller is not really motivated, you will not have a very good chance of getting a low enough price or good enough terms to make a profit.
Always, always, a good real estate investing deal starts with a motivated seller.
But it does not stop there!
You can have a motivated seller who wants to dump 50 rental properties but they just refinanced last year and pulled all the equity out so there is not enough margin for you to make a profit.
You can have a motivated seller but they owe more in their mortgage than the house is worth. There is not much you can do to help them.
Any time you have a potential opportunity, get on the forum with all the details, like how much is owed, are the payments current, is it rented, how much, when was it purchased, what is it really worth (do not ask the seller for this info), what would it rent for, etc…
With all the details we can help you formulate several ways to do the deal… or sometimes we will advise to run in the other direction.
Always remember that we are here to help you. ASK questions when you are not sure what to do or how to do it.
There are 2 guiding principals at CashFlowDepot — (1) help you make as much cash and cash flow as possible, and (2) always find ways to achieve #1 without risks – or minimize risks.
It is better to do no deal than to do a bad deal.
But with the right training and guidance that you can get here, you will be able to meet your goals.
Thanks! That is going be very helpful in the future You must be logged in to reply to this topic.
