You must be logged in to reply to this topic.
-
Hi
Just landed another deal with seller option to control and rehab property for resale. This allowed me to rehab with no money down and invest in the rehab costs only. This is a light remodel of finishes only. So this will be easy to turn around in a nice neighborhood. Purchase at 110K and will resale around 208K. Very nice flip!!
AllenHI Allen
Congratulations! Great numbers on this one. Since you are putting money in to the house and likely selling to a retail buyer, there is a better way to structure this instead of just an option:
Actually BUY the house with seller financing with one payment of $110k due when the house is resold. No interest and no payments until then. Probably put a 6 month or 1 year timeframe on when the seller has to be paid. This would have a recorded $110k lien against the property which would be paid off at closing when you sell to your buyer. The reason this is a better is because your buyer will have a hard time getting financing if you, or your entity, or a trust you control, is not on title. Another reason it is better is you will completely control the property.
If you don’t want to take title, at the very least you need to record the option, not just a memorandum of the option. But then the whole world will know what you paid for the house. This will at least protect your interest but it is not the ideal situation. It would be much better to actually BUY the house with seller financing with no payments until the house is rehabbed and sold.
Did you pay a title company to do a title search to make sure there are no liens or judgements recorded against the house? Don’t start doing the rehab until this is done. The last thing you want is a nasty surprise when you go to sell the house.
How did you find the deal? What was the seller’s motivation?
Hi
This is owner financing with a purchase of the house at the resale closing. So technically a double close. That 110K lien(that you propose) represents the purchase price, but not the profits due to me at close, but …How do you justify how much to lien, except that the 110K is close to the purchase cost. Hard to have a conversation with the seller that says this is how much you are making in profit, thereby here is my lien….which is not set in stone how much you are going to make….So just setting the lien at the purchase price is better…so this amount represents your investment in the property. I did review the equity of the property by title report. This is no payments due and payoff at closing. We found this deal through a friend. The motivation of the seller is they are moving and need to payoff some debts. I would like to sell via highest bidder. Will attend you conference call tonight on this. Do you do this bidding with a reserve…or is that self defeating??? And as well, are you getting a listing in the MLS via a listing fee(no agent) instead of contracting with an agent? Do you do a Broker Open ? How is that arranged????Allen, If you don’t plan to do repairs to the property and only plan to do a Highest Bidder Sale, then just having the Option is fine. I would still record the option or a memorandum of the option.
When you have a Highest Bidder Sale, there is always a reserve but the amount is not posted or revealed to anyone.
I would never put it on MLS or contract with an agent for a Highest Bidder Sale. They whole objective is that YOU make the profit, not to give it away to someone else. In all my literature I post that I do not pay a commission but a buyer is welcome to pay a broker or agent if they want to use one.
We will discuss hose to do a Highest Bidder Sale in more details tonight. Plus there is a LOT of training in the Premium Member section about how to have a successful Highest Bidder Sale.
You must be logged in to reply to this topic.
