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ramgon1280
101 Posts
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Posted: 01:15 on 10-02-2008
I have a seller who is recently divorced and is desperate to unload her $3,000 a month payment now. The home is vacant. She's open to a subto arrangement but because she has an ARM mortgage, I'm leaning towards wholesaling it. I've never put a wholesale deal together so any help would be appreciated:
Details:
FMV: $320 - 340K
Loan: $223K
Would $250K be a reasonable wholesale price on a house like this? It's a former model home less than 5 years old and in immaculate condition. Would formula should be used in pricing wholesale properties? Any help is greatly appreciated. Thanks.
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cjmazur
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Posted: 05:03 on 10-02-2008
seems too rich to be true. By my calcs that would be 17.24% int. Do you due diligence.
Say she is willing to sell it for 230.
You put it under an assignable contract with a long escrow, and generous contingencies. Boom you control the house.
Now find someone that will pay more than 230, what every you want to make on it, say 280.
In consideration for selling it to the buyer, they pay you 50K and you assign the contract.
They then close and own the house.
If not, cancel the contract or as some say use a small ernest money deposit and walk.
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ramgon1280
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Posted: 12:05 on 10-02-2008
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On 2008-10-02 05:03, cjmazur wrote:
seems too rich to be true. By my calcs that would be 17.24% int. Do you due diligence.
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Can you clarify on this? I understand due diligence but what calcs are you running? Also what do you mean by long escrow? Thanks.
Also, I should probably clarify that the loan is not 223K as I incorrectly stated. That would actually be the purchase price. The underlying loan balance is $196K at 9.4%.
[ Edited by ramgon1280 on Date 10/02/2008 ]
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finniganps
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Posted: 14:27 on 10-02-2008
Why would you sell the house for only 250 if it's worth at least $320k? Seems to me you'd try to get closer to $300k. I'm not clear on what you would pay for the house though (you said 223k, but that you'd wholesale it for 250k)?
[ Edited by finniganps on Date 10/02/2008 ]
[ Edited by finniganps on Date 10/02/2008 ]
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omicron3000
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Posted: 15:04 on 10-02-2008
How were you able to find this divorce property?
Quote:
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On 2008-10-02 01:15, ramgon1280 wrote:
I have a seller who is recently divorced and is desperate to unload her $3,000 a month payment now. The home is vacant. She's open to a subto arrangement but because she has an ARM mortgage, I'm leaning towards wholesaling it. I've never put a wholesale deal together so any help would be appreciated:
Details:
FMV: $320 - 340K
Loan: $223K
Would $250K be a reasonable wholesale price on a house like this? It's a former model home less than 5 years old and in immaculate condition. Would formula should be used in pricing wholesale properties? Any help is greatly appreciated. Thanks.
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rehab2day
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Posted: 15:10 on 10-02-2008
A $3,000/month payment on a $223k loan? Are you sure? Make sure that there is not a second mortgage. Better yet find out specifically where the $3k/month is going because if that is the monthly payment on $223k you don't want to do it sub-to - that would be a terrible loan.
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cjmazur
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Posted: 18:50 on 10-02-2008
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On 2008-10-02 12:05, ramgon1280 wrote:
Quote:
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On 2008-10-02 05:03, cjmazur wrote:
seems too rich to be true. By my calcs that would be 17.24% int. Do you due diligence.
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Can you clarify on this? I understand due diligence but what calcs are you running? Also what do you mean by long escrow? Thanks.
I was running 3000/month PV=223 for 30 years into a financial calculator
Also, I should probably clarify that the loan is not 223K as I incorrectly stated. That would actually be the purchase price. The underlying loan balance is $196K at 9.4%.
<font size=-1>[ Edited by ramgon1280 on Date 10/02/2008 ]</font>
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finnapp, the proposition was wholesaling not retailing..
ergo leave some juice for the assignee.
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ramgon1280
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Posted: 19:08 on 10-02-2008
Thanks for the replies everyone. Here is some more detail. Note: I am meeting the seller this week to go over their paperwork for due diligence so much of what I know so far is from public records and the seller.
- County records show one loan in the amount of $196K back in 2005. ARM loan at 9.325%
- Seller told me her payment is "almost $3K/month"
- Seller will accept $223K although we are still negotiating so this could change
- Houses in the area range from $289K - $340K
- I am interested in wholesaling this property rather than retailing bc I could not get the financing or afford the carrying costs.
I just don't know what would be a reasonable price to present to other investors. How much equity in the property must be left for it to be an attractive deal (considering of course that the house needs no work at all)?
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ramgon1280
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Posted: 16:40 on 10-04-2008
Okay, so we negotiated a purchase price of $235K. I'd like to sell for $250K. How do I locate an investor to sell to and how do I protect my interest?
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loon
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Posted: 17:37 on 10-04-2008
I hope she's easy to deal with. If it's not under (assignable) contract, do it now. File and "affidavit regarding Real Estate" with the county to protect your deal from others who might undercut you. Be sure you have keys and access, esp. if it's vacant, which is best by far, so you can put on a lockbox. If not, tell her you'll be bringing associates, contractors, appraisers, inspectors, etc. by, so she's not freaked out by all the visitors.
Then advertise ASAP; local papers, Craig's List, local papers, shoppers, REI clubs, etc. Stress it's a "wholesale" deal, and you need someone who can "close quickly with cash," as you'd probably waste time dealing with picky, slow-moving, poorly qualified retail buyers (or at least make sure they're dead serious and can easily and quickly close) .
Don' t be too greedy with the price, or you won't get much action Stress that you're taking offers as well, and expect some over your asking price which you'll get if you price it right. If it's an obvous deal, don't even show it until you have a signed PA with a buyer and earnest $, subject to their inspection.
A serious investor will understand the nature of the deal and cooperate; a typical retail buyer won't, so that helps you weed out the Lookie Lous. If you're too new at this, I seriously recommend partnering up with an experienced investor you can trust, in exchange for a "helper's fee" if necessary. Good luck, sounds like you got a winner.
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ramgon1280
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Posted: 18:47 on 10-04-2008
Thanks Loon. I think I will look for a partner on this deal. What would be a reasonable fee to pay? I suppose a percentage of my cut would be the most logical and provide the best incentive for a good result.
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ramgon1280
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Posted: 22:52 on 10-04-2008
I may have found an investor-buyer. The potential buyer sent me the following message in response to my ad. At the risk of sounding naive, what does this mean:
"We may have a buyer. This buyer would be an owner occupant so would you be willing to assign to us if we can bring you this buyer?"
I figured that I would be assigning the contract as standard procedure but the phrasing here makes it seem unconventional. Would this mean I would just be paid my fee in cash by the investor and just bow out of the transaction? Thanks.
[ Edited by ramgon1280 on Date 10/04/2008 ]
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loon
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Posted: 23:59 on 10-04-2008
This could be a real lead, or someone fishing to find a deal THEY could wholesale again. Don't give them any specifics until you've filed the "affidavit" mentioned above to cloud the title so the deal can't be "stolen." Maybe don't even call until Monday, blame the weekend Not likely to happen, but possible.
Then figuer a reasonable assignment fee, and say matter-of-factly "the price including our assignment fee will be $255k (or whatever). They may want to negotiate, if so, ask "How many deals like this do you buy a year? Because I could bring you many more. We set our fee at a very reasonable level for this property, and there's definitely some good profit to be made at this price, do you think?"
That's how I'd word it; I encourage you to get more opinions. Try to avoid long rambling discussions that could get you off track, or show that you're new to this. Make it a matter of fact deal. Whatever they offer, tell them you'll need it in writing, with a $1000 earnest check that is only refundable if you turn down the deal, or it fails their inspection.
If you're feeling bold and get a lot of calls, you could even insist on a contract before you even show the house, but you could lose a few good leads that way. Don't be too upset if the first person turns out to be a dud. If it's the deal you think, it should be easy to flip as long as you leave a healthy chunk of equity on the table.
Anyone else care to weigh in?
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ramgon1280
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Posted: 00:50 on 10-05-2008
Thanks Loon. Here's an answer I received in response to my request for clarification on my previously posted quote:
"As a wholesaler also, if we can bring you a buyer you assign to us and we split your fee 50/50. So if we need to up the sale price to accomadate your fee and ours that is how it would work. That is the rule of thumb in the wholesale world. "
Is this arrangement typical?
[ Edited by ramgon1280 on Date 10/05/2008 ]
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ramgon1280
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Posted: 14:40 on 10-05-2008
Does anyone have an Affidavit to cloud title that they wouldn't mind sharing?
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