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Hi Jackie and fellow CFD members,
Today I spoke to a tired landlord who wants to sell ASAP.
It’s a 2/1 house built in 1983 has only been rented never updated but is in good repair. Got a new 25 year roof in 2005. Owned free and clear. It’s in a very desirable area with mix of owners/renters.
ARV is 95k to 110kCurrently rented month-to-month. Possible red flag here – the renter is a friend who doesn’t know he’s selling.
Owner said he’s tired of being a landlord he’s too old for it and his wife is urging him to sell and get rid of it. He’s had some really bad renters in the past and finally rented to his friend for below market rent because he knew we take care of it which he has.
Explained that I worked with a group of investors and his house might be what they are looking for.
Asked him if I could buy for all-cash and close quickly as is with no commission and pays closing cost was the least he could take? He said “I have no idea. I listed it with a broker when the prices were crazy but I have no idea what it can get now.”
My questions – what are you say one owner says something like that?
Last year a very similar REO sold in three days for cash at 65k. So I think 65-70k is where I could sell so I would need to get it at 55-60k max.
He’s ready to show it and said if we don’t buy, he’d just list it because he just wants to get rid of it. He said “get rid of it” about 4-5 times throughout conversation.
I am asking for help because I don’t want to screw it up!
I think I should make offer by phone before I inspect it but I don’t want to say number first.. He said he can show it to me whenever I want – he’s 45 mins away.
Thanks!
Kimberlyif you make 2 offers he is more likely to pick one. You could even make 3 offers on this one.
1. $60,000 cash close in 2 weeks
2. Buy with seller financing, pay $3,000 in payments up front for down payment then $500 a month until paid for. Explain that he will continue getting paid every month without the landlord headaches. Then you could resell with seller financing to an investor.
3. If he balks at the $60,000 offer, tell him you know how he could get more. Then explain the highest bidder Sale method. tell him you can get investors to fight over who will pay the most. And the house can be sold in 1 week
4. how about a master lease? do you want a rental property. if not, then you could sublease to someone who does.
what else can you think of?
There are a lot of ways to make it work when you have a motivated seller. Because he is renting below market, cash flow may not be what he needs. Or he may not need the cash from the sale as much as he just wants to get rid of the house. When that is the situation, you should always offer alternatives to a cash offer
Thanks Jackie.
He said he wanted to be done with the property – didn’t even want payments. Mentioned that he knew he would be hit with capital gains but he was through with it. Negotiated $50,000 cash, close in three weeks.
Sent him docusign contract to get it under contract quickly. Called to follow up to make sure he received it. He says he thought their was a misunderstanding because he agreed to $50k cash and a note for 30K.
My bubble burst! Somewhat discouraged by flaky sellers. Not sure what happened but I left the door open and said I would follow up with him. It’s not a deal at $80k with a ARV of 110k tops.I am not looking for rentals at this, looking for cash flow.
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