Hello Quick Turn Gurus,
I took the RLG Quick Turn course several years back and cannot find the binder. I have a potential AFS deal on the table that I would like to evaluate. Can someone please assist me with the evaluation criteria of the deal.
A. When evaluating a AFS deal, what makes it a good deal for the investor?
B. What are the critical must haves in order that it makes sense?
C. What criteria are used to evaluate a AFS deal?
My guess from memory:
1. Sellers "list price"
2. Market value of property (CMA?)
3. Appraised value of property (Professional appraisal?)
4. Amount of equity in the house
5. Determine what the seller is willing to walk away with?
ir="ltr" style="line-height: 1.15; margin-top: 0pt; margin-bottom: 0pt;">6. If seller has put significant amount of cash down into the property during purchase and wants to recover that cash upon executing a AFS deal, how would this be dealt with? What can be negotiated here?
7. If seller agrees to the AFS concept, apart from selling price, how would financing be negotiated? What are some negotiating points for the investor?
b. Interest rate
c. Amortization period
8. Determine if the seller is willing to waive the first 3 months of mortgage payments?
-How is this justified again?
9. Mortgage amount outstanding
10. Monthly mortgage payments
11. Annual property tax amount
13. Monthly utilities
14. Determine/evaluate the market rent in that area for that type of property
15. Determine/evaluate a RTO amount of rent for that type of property in that area
16. What needs to be evaluated to make this a RTO type of property in your portfolio?
17. What criteria are evaluated to determine if AFS or Lease Option is the best course of action?
18. What type of due diligence issues are required for the investor to investigate regarding the seller?
a. Ability to continue mortgage payments
b. Potential for seller to go bankrupt (how would this be evaluated?)
c.ace: pre;"> Credit check
19. What other due diligence is required that is particular to an AFS deal?
20. Is it an absolute that the seller agree to have a common bank account with the investor to monitor both:
a. payments from investor to seller
b. payments from seller to bank, city, insurance company
Do any problems arise with this method?
21. What Issues can be presented to the seller that are to his benefit?
a. Seller not needing to pay realtors commission
b. Seller not required to pay mortgage penalty fees
c. If it is a newly purchased property by the seller there is not much equity, the commission and penalty fees would eat away at any equity or cash down into the property
d.e;"> House is sold at a price both parties agree upon
e. Sellers problem is solved, both parties win
What other benefits can be presented?
I understand these are a lot of questions. Any and all guidance on this process would be greatly appreciated.
Thank you very much.