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Hi Jackie and fellow members,
Got a verbal agreement today from a seller for 2 houses at $80K each in decent shape.. Each is worth $135k -$140k ARV. Both are rented month to month. The inventory is tight here, so I expect to get a cash buyer quickly. Do I need to stipulate anything regarding the tenants? One tenant is an A+ who pays on time each month and makes minor repairs to the house from time to time. the other one has been a couple of days late twice over four years. My plan is to market them as soon as I receive the signed contract,
Great deal! Tie it up with a written contract as fast as possible.
When selling, you will need to reveal that the property is tenant occupied, what the terms of the lease are, and give a copy of the lease. Some buyers will want to get a statement from the tenant that says they are paying $x each month and have been at the property since… year.
You could specify that the tenant much be able to stay for the full term of the lease. There are probably state rules about that.
Thank you Jackie!
Jackie, I can sell these for $88K each. Is it wise to ask for 88,500 for wiggle room? A friend who is an investor in another city but knows values here like the back of his hand said I could get 88k easily. Now looking to compile a list cash buyers! Haven’t received signed contract yet so I won’t put ads out until I do.
With or without the month-to-month tenants, it sounds like this deal could also be a candidate for a Highest Bidder Sale?
Of course it is your call, but using HBS I think it would be realistic to pocket at the least 35-40K.
I think your are all right.
As I imagined, the sellers had their attorney look over my contract. I just got off of the phone with the seller and attorney has a list of questions (of course!)
– Wants to know – if I am “brokering” the deal – or if I will be closing.
– Wanted substantial down payment/escrow. I explained that I was closing quickly with cash so I only did $10.00 for contract consideration. (Owners were ok with that)
– They said the contract wasn’t clear on me paying their closing costs (they know they have to pay the taxes)
Okay – I am nervous. I don’t think I can parade even a handful of “partners” through the houses without raising the ire or suspicions of owners. Can anyone recommend transnational or hard money lenders?
I appreciate any feedback.
the questions you got from the seller and attorney sounds like you presented yourself as the buyer.
It is much better to tell the seller … that you work with a group of real estate investors ( your buyer’s list) and you believe this property will be just what they are looking for. But before they take time to come look at the property, it is your job to get a contract, then the investor group will come take a look for final approval. Give 10 days for that inspection and approval.
That is how you get your buyers in to the house.
You have 10 days to either do the deal or get out of the deal.
Do you have a buyer list?
At this point, the best way to save the deal is not to buy the property first then hope that you can sell them. Contact some of your most experienced buyers on your buyers list. Tell them the situation. If they want the deal, you will assign the contract for $8,000. They will come to the table with cash.
What does your contract say about closing costs? Typically in a wholesale flip deal, your contract says the buyer will pay the closing costs minus prorated taxes or HOA fees. You need to make it clear about closing costs. Of course, when you sell, you pass all closing costs on to your buyer. If you do a simultaneous close, then there will be some closing costs on your end but not much.
You are right. I did tell the seller that I work with a group of investors but I didn’t tell the rest – I ws nervous that it would scare him.
I guess the bottom line is the attorney wants to make sure I’m not brokering the deal, that I’m a serious buyer, wants substantial money in escrow, said it wasn’t clear that I was paying the closing costs, etc.
I told the seller I understand that your attorney wants to protect your interest and yes — I am a serious buyer I want to close on this property is much is you want to sell it.
and that hen I’m buying all cash I normally don’t put down a lot of money. I use a $10 binder just make the contract valid. I work on a lot of property deals and having large deposits became a nightmare to keep track of. Sellers that I have worked with know that they are getting 100 percent of the cash within 30 days or less, so it hasn’t been a problem.
The buyer seemed okay with that.
I’m speaking with the seller tomorrow.
I’ve seems like he wants to sell and is not trying to get out of the deal.
I will tell him what you said above – should I add?
Mr. Seller within 30 days or less you will have $80,000 for each property in cash in your hands, it just may not be me from sitting crossing you at the closing table.
I explained to seller that I will have to have my inspectors and funding partners come to see the properties.
And he’s okay with me telling the renters that I’m inspecting for insurance purposes.
He told me today that renter of one of the houses got wind that he’s selling and is moving by he end of this month and asked if that was okay. Ii said it was fine.
I’m nervous but feel so much better with your guidance. Is there a book that I can buy that explains more or what you mentioned. It;s clear I learned wholesaling in the wrong way and want to know and do better. Thanks Jackie!!!
Forgot to answer your question – I have very small buyers list but I will stay on it until I find some to buy this deal. I think they would be awesome Highest Bidder Sale material because a house identical to these two sold last year for $140,000.
Watch out there. If you tell the seller you have closed other deals with $10 down they may say they want to talk to some of those sellers or talk to the title company who closed the deal.
Do not get boxed in to a corner with no way out…
To make the seller feel more comfortable, you can say once the property is approved by your investor group, they would be glad to put up a $1,000 non-refundable deposit at the title company.
That’s a good idea. I will do that. The other deals I have done with in partnership with others – I have done with an “evergreen” account with the title company, so I never handed any checks over to sellers.
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