$200,000 in equity...Now What?

[sswift]

I just stumbled across a beautiful 5/4 duplex (one unit being a 2 bedroom, 2 bath and the other a 3 bedroom, 2 bath. . Its REO and listed for $160,000. ARV in the area is $360,000 and it needs about $10,000 in repairs (To bring it up to market value, its still livable w/o repairs). Fair market rent in the area for a 2/1 is $900. Its not yet listed on the MLS. I have No Cash & Bad Credit. What can I do?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GlobalWealth]

I just stumbled across a beautiful 5/4 duplex (one unit being a 2 bedroom, 2 bath and the other a 3 bedroom, 2 bath. . Its REO and listed for $160,000. ARV in the area is $360,000 and it needs about $10,000 in repairs (To bring it up to market value, its still livable w/o repairs). Fair market rent in the area for a 2/1 is $900. Its not yet listed on the MLS. I have No Cash & Bad Credit. What can I do?

email the information to me? :cheers:

Seriously though, you need a partner. Do you have any cash? If so, buy an option on the property. For example, approach the owner (bank I presume) and tell them you will give them $5k for a 60 day option to purchase at $160k. Then bust your a$$ finding a buyer and sell them the property.

 

[sswift]

will the bank accept the offer if there is a contract clause subject to a partner pending decision or assessment aka If i don't find a buyer within the 60 days i get my buy option back? I don't have 5k, but I'm sure I can obtain it somehow...
I was thinking about a hard money lender, but most only lend 60-70% and I have shitty credit (which i'm working on)
Any-other options?

 

[GlobalWealth]

will the bank accept the offer if there is a contract clause subject to a partner pending decision or assessment aka If i don't find a buyer within the 60 days i get my buy option back? I don't have 5k, but I'm sure I can obtain it somehow...
I was thinking about a hard money lender, but most only lend 60-70% and I have shitty credit (which i'm working on)
Any-other options?

With an option, you are essentially buying time, nothing else. With the option, you are buying 60 days of time for $5k. You would not get the money back. This is the risk you take with options. If there really is $100k of equity, the property should sell pretty quickly once it gets listed so you shouldn't have problem selling it for a profit if you get on the front end of the deal.

Your only other option is to go to FFF (friends, family and fools) for money and a partner. Maybe you could find some FFF's who can cumulatively front you the 20-30% down payment in exchange for a piece of the deal. Of course you will also need a partner with good credit who can qualify for the mortgage.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[LesG]

Most would want to partner or pay you a finders fee.

If that won't work, HML still works if it really is this good.
You just need a HMLer that wants the property if you default.
You can email me the situation.

 

[hatterasguy]

Find a partner, fast because if its as you say it will probably be under contract in a couple of days.

If it isn't than it probably isn't a very good deal.

 

[AdamJordan]

I agree with the Above comment..Absolutely find a partner on it. The only thing I would put into question is the price of the property and your return on it. I'm in Florida, but no matter what state you're in you should be able to find a better priced property than that. As a real estate investment agent, I'm working with a property that is a 4/2 block duplex. believe it or not 35K!! needs about 5-10k in rehab and expecting rent to be 600-700 per unit. All i'm saying is that you dont neccesarily have to stretch your wallet when sometimes all it takes is finding the RIGHT deal.

Adam Jordan

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[jrmartin]

I agree with the Above comment..Absolutely find a partner on it. The only thing I would put into question is the price of the property and your return on it. I'm in Florida, but no matter what state you're in you should be able to find a better priced property than that. As a real estate investment agent, I'm working with a property that is a 4/2 block duplex. believe it or not 35K!! needs about 5-10k in rehab and expecting rent to be 600-700 per unit. All i'm saying is that you dont neccesarily have to stretch your wallet when sometimes all it takes is finding the RIGHT deal.

Adam Jordan

The price of his property seems like it could be right in line with the market depending on where he is at! Also, if FMR really is $900 for a 2/1 then they should easily be looking at $2500-3000/month in rental income.

I dont think his issue is not having the money to put into THIS property, I think its not having money to put into ANY property. Swift, I would suggest you find someone with some liquid cash who can pick up the deal. I wouldnt suggest you go into it looking for some sort of partnership, but instead look to collect a finders fee of sorts on the property. Take some quick cash (if your numbers are really accurate, say 5-8K) and ask to be kept in the deal for the experience sake. Develop the relationships, gain some knowledge, put some much needed money in your pocket, and then start bringing a little more to the table later on down the line.

Adam, if I had to guess, I would say either Tampa or Lehigh Acres??

 

[Rickson9]

I just stumbled across a beautiful 5/4 duplex (one unit being a 2 bedroom, 2 bath and the other a 3 bedroom, 2 bath. . Its REO and listed for $160,000. ARV in the area is $360,000 and it needs about $10,000 in repairs (To bring it up to market value, its still livable w/o repairs). Fair market rent in the area for a 2/1 is $900. Its not yet listed on the MLS. I have No Cash & Bad Credit. What can I do?

Speaking for myself, rental property is worth 5x gross annual rent. Assuming that I could gross around $2,000 a month for this duplex that would translate to $24,000 per year. The maximum price that I would pay is $120k. That would give me the leeway to absorb the costs associated with all the expenses that this rental will need.

Even if I could gross $2,500 a month this would translate to a max price of $150k.

Considering the current market environment I would put in a bid of $110k and see what happens. There would be a good chance that the bank would respond favourably.

I could be horribly wrong (it happens often), but I don't think that I could tenant the duplex for $3,000 gross a month unless it is in a fairly upscale neighbourhood. It would need to be a B+ or A- building I think.

Considering that you have no cash and poor credit you could try and bird dog the opportunity to an investor for a couple thousand. It would be worth it especially if you could get it under contract from the bank and indication that they would consider $120k.

As an investor myself I would not find ARV useful. It doesn't give me any useful information about the propery unlike gross rent, property tax, crime stats, etc.

For myself, each of my 2 bed 2 bath condos in Phoenix, AZ (bought short sale or REO) are 830 sq ft and they rent out for $700 a month in B- neighbourhoods and are listed at $35K to $40k each. So 3 of these would rent out for $2,100 gross so that's why I'm thinking that the ballpark for this duplex is around $2,000.

Good luck!