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Sure could use some help developing a couple offers.
Situation: Home owners realize they are not cut out to be landlords and want to sell by Oct 31st. They have owned the 3/1.5 1200 SF house since 1999. “no longer have any attachment to the house”
They owe $36,400 with a monthly note of $331 P&I for another 204 payments (8%) to an elderly retired RE agent (she planned for retirement well – bet this isn’t her only one). House is maybe 1/2 rehabbed after some friends rented and didn’t do work. Many rehab materials are onsite. Roof & HVAC are less than 5 years old. Floating laminate floor to be laid in one bedroom. Kitchen needs new appliances and countertops. Lots of finish trim work/paint needed inside and out. Good neighborhood with almost all owner occupants on the block.
ARV – $80k
Repairs – $15k (or maybe $20k though probably less)Probably a skinny deal, maybe $40k cash or $50k w/ wrap and small down.
Thoughts on offers:
HBS with owner finance (wrap). 50/50 Split down payment or even 60/40 if I can wrap for over a year to get tax benefit and small monthly CF until paid off.
HBS for cash and 50/50 split all above payoff.
Would really like to Master lease this one, however would need to coordinate completion of the rehab
so probably not an alternative. Wrap for payoff (or up to $41k with sellers getting paid approx $5k when I get paid.) Don’t want to do this since I really don’t want to coord the rehab.
Leaning toward the first HBS, however open to ideas.
Thanks,
Hank
Hank
Sounds like a perfect opportunity. What do the sellers want out of it.. if anything? Hopefully they are realistic that there won’t be much profit because of the condition of the house.
Here are my suggestions.
1. If the owners are ok with you buying it subject to the mortgage (with a seller finance wrap like I teach) then you should do a highest bidder sale for the highest down payment. Split the down with the sellers if necessary. You get at least 1/2 of the down payments, monthly cash flow, and a possibly pay day when the buyers cash you out. But… do not be too eager for them to cash you out. It would be better to put a 5 year balloon on the note, with the right to extend for another 5 years for a $1000 payment.
Put a due on sale clause in your note to your buyer which prevents them from selling to someone else until you are paid off.
If they should default or decide they do not want to be a landlord, then you can get the house back.
Plan B – would be a straight highest bidder sale for the highest price. This will one would be harder to sell but doable. Your buyer would likely come from the neighborhood so make sure you get fliers distributed to all houses and put a BIG sign in from of the house to announce the highest bidder sale.
They owe $36,400 with a monthly note of $331 P&I for another 204 payments (8%) to an elderly retired RE agent (she planned for retirement well – bet this isn’t her only one). 
so probably not an alternative. 
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