OfflineHello Everyone,
I have read Dean's books "Profit from RE Right Now" & "Be A RE Millionaire", so im ready and eager to attempt my first deal. These books were great and Dean is a great author. I am just needing some assistance and insight from those who have done this already. I found a nice single family home, approx 1200 sq ft, unfinished basement, 3 bed/1 bath in a very nice suburban neighborhood, rated in the top 10 for cities to raise a family and school system. The owners are selling it for $174K and own it. Property needs updating with no substantial rehab work, around $15K worth of work in order to have it the way I want it. I told my realtor I would like to do a contract for deed on the property since I had a short sale 3 yrs ago and still in need of boosting my credit score, which is presently @ 665 (average between the 3 bureaus). Also the bank wants to see all release of liens on past properties which are less than the 3 year mark from the short sale so the banks have turned me down for a loan.
My realtor is telling me in order to accomplish the contract for deed the seller is wanting to see proof that I can get a loan by a certain date. Whether it be 6 months or 12 months later. There is no way to get proof on paper because a bank will not tell me when I can get a guaranteed loan. I have paperwork to show im gainfully employed and have been with the same company for 4yrs now, have proof of paystubs, w2, and able to put $10k down. I just cannot show proof that im guaranteed a loan in a certain period of time.
How can I get the seller to do a contract for deed with me? If someone could guide me or give me some helpful tips, it would be greatly appreciative. Thank you in advance.
Sean
What is their motivation to sell and why do you want to buy?
i would first determine the sellers true reason for selling, his personality, his needs, and what he plans on doing with the money after the sale. This is considered the power of negotiation. The more u know the more power u have. Simple as that. Also Did u have a licensed contractor or licensed home inspector give u an actual estimate of repairs or upgrades that the home needs that would add value? Did u physically inspect the property yourself? Do u know the FMV of the home through your realtor using comps of homes that have sold recently? This is just basic reinvesting 101. Hope it helps.
Hi,
The seller is elderly and would like to retire to a warmer climate. I went through the house with my realtor who has investment properties and has been in the RE game for over 20 yrs and knows the ins and outs of what the costs would be since he renovates all of his properties and either rents them or does flips. Im looking for a buy and hold. He did run comps and if I could buy it for $160K the house should be worth around $200k when fully rehabbed. I would like to buy the property for myself as a main residence for a few years, rehab it during that time, then ultimately give it to my parents as a home they can retire in and not worry about another house note again. So that is my main goal but its hard to acquire the property when they are looking for a written statement that says I will get financing by a certain time frame. Maybe I should write a lease option contract for up to 2 years that would give me the time I need to get a loan. Otherwise I dont know of any other ways to buy the property.
Thank you,
Sean
$174K, may be worth $200K later, if you put $15K into it, AND you're willing to put $10K down? Plus you want to keep it, not flip it? Not trying to bring you down but, is there REALLY enough potential profit here to justify all that effort? I mean, you could just as easily (or easier, I'm sure) flip a couple $100K properties with MUCH flexible sellers, and turn your $10K into $50 or $100K in a year or two. If that place is still on the market then, you'd be able to pick it up much easier. If it's already sold, a better one will likely be out there for you to grab.
You're RIGHT, there IS no way to guarantee when you'll qualify for a mortgage, and unless it's his 1st day on the job, the agent who told you that knows that already. Maybe he was testing your mettle, maybe he was trying to get rid of you without sounding like a jerk, who knows. The BEST you can do is have a mortgage broker analyze your info. and tell the Seller's Agent a rough guesstimate, but even then, it's nothing more than an educated guess. They can't guarantee anything because they don't know what you will do to your credit before you do it.
If the sellers want it out of their names fast, you can agree to secure financing and payoff the total balance to them by a certain time (L/O would work there), but if there's an agent involved, he's looking for a ca$h transaction. He's not gonna help you make his sellers accept seller financing, because then he won't get paid for months (if ever). I'm not in your shoes, but if I were, based on what you've told us, I might just see how flexible the sellers truly are on price. If they're not flexible, keep this property in your "watch" file, and let the market run its course for a couple weeks. Bottom line, if you need to improve your credit and build up ca$h, I'd flip faster moving houses for a profit, use part of the profits to clean up your credit, and wait 2 or 3 deals before going after one you plan to live in. I wish you good luck and success either way you choose to go...
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
Thank you very much for your advice, im guessing you have done many investment buy and holds & flips. I appreciate any advice, with only around $10k-$20k available to put down, maybe a buy and flip for a couple of deals would work best to build up my account so I can buy outright and not use the conventional banks. If I can ask regarding your comment ("I mean, you could just as easily (or easier, I'm sure) flip a couple $100K properties with MUCH flexible sellers, and turn your $10K into $50 or $100K in a year or two"). How would I be able to buy the $70-100K homes, flip them and make that kind of money with only $10-$20k available cash? Would I have to do lease options? Thank you
Sean
I think trying to extend the term 5+ years if possible would be a guarantee that your ability to get a loan by then. If the sellers really don't need all the money up front and if your intention is to rent it out...that should work.
Hope this helps.
Linda
"...be; not greedy for money....but eager to serve"
1 Peter 5:2
Hi Linda,
Thank you for your response. Extending it up to 5yrs would definitely work because I can get a loan once I correct my release of lien on my shortsale. The short sale took place on 12/2008 but the release of lien reads 06/2010 so I dont understand why there is a big timing difference which needs to be corrected. so worst case scenario I can get a loan if i dont fix the problem on 6/2013.
If I do the lease option up to 5 years, will the down payment I provide and the monthly payments we agree upon, wont that go towards the principal of the agreed upon sales price? Or is the monthly payment considered rent and does not go toward the final sales price?
Thank you,