Offer on vacant duplex needing full rehab

You must be logged in to reply to this topic.

Viewing 5 posts - 1 through 5 (of 5 total)
  • Posts
  • Hello all –

    Working on preparing an offer to purchase a duplex that needs lots of work, basically full rehab of both units. Out of state seller contacted me and wants to get rid of the property.

    3/1 – 770 sq.ft each unit
    Rents: ~ 650-700/mo each unit
    ARV: ~ 100K
    Mortgage Balance: ~ 39K
    My CASH Offer: ~ 38K

    From what I can tell, the seller will not take the cash offer but I will make it anyways.

    I am also thinking about offering to take over the payments which are ~ $375/mo, use a wrap and sell using seller financing to create a spread. Maybe I could set it up so he could get some of the equity, not sure yet.

    My question really is, would this be attractive to a rehabber to buy on terms since this will be a full blown rehab and they will have to start making monthly payments right away?

    Any feedback will be appreciate it.


    Hi Rafael

    If you do not want to keep this property for yourself – and you should not with so many repairs — then an Option for the mortgage balance )subject to) makes more sense and would be safer than a cash offer.

    Then do a Highest Bidder Sale with seller financing. Have a starting bid of $3,000 with a sales price of $65,000 at 8%. You could offer to split the down payment with the seller. But you will get the monthly cash flow spread and the upside. If you put a 1 year balloon on the note s you get cashed out sooner. You could also include in the note a payment of $3,000 for a 1 year extension. If they default, you get the house back, in better condition, so you can sell again — or keep it.

    Alternately, get an option for $40,000 ( not $38k) then wholesale it for $60,000 to $65,000 to get in and get out fast. No monthly cash flow but a nice infusion of cash.

    You did not mention if the taxes and insurance are included in the note. If not, you need to make sure they are current. Are the payments current?

    Let us know how it goes

    Hi Jackie,

    Thanks for the quick reply.

    Taxes and insurance are not included in the in the note. Still have to find out if payments are current for sure.

    On the alternative you mention using an option and then wholesaling it, do you think a rehabber will pay the 60-65K sale price?


    If you sell with seller financing that wraps the underlying loan, you can definitely get $60,000 to $65,000

    If you want a cash deal, you will get less — maybe could sell for $50,000 to $55,000

    It just depends on the condition of the property and how much it will take to get it rent ready.

    You will always make more if you can offer seller financing but it will take a little longer to get paid off 100%. It’s worth the wait!

    Thanks Jackie!


Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.