Potential Quick Turn Deal

[JimWhitelaw]

I have been in discussions with a seller that came to me via an online lead from my website. I have not yet been out to see the property, though I do know the area of the city (Edmonton) fairly well, so I`ve got a decent feel for the type of property and price ranges. Ironically, it`s also in the location I`ve been targeting with my yellow letters.

Here`s the particulars on the deal:

1018 sq ft Bungalow w/ 1 BR basement suite, single garage. Needs some updating - flooring & paint.

Asking price: 270K
Existing financing: 125K
Repairs needed: ~15K
ARV: ~310K

Taxes $2100/yr, included in 1st mort pmt.

Current financing is as follows:

1st mort 90K, pmt 975/mo, 3 yrs left in term, seller is behind 2 pmts
LOC 20K, has been paying ~ 275/mo (seems high for an int-only LOC)

I`ve followed Tony`s advice and haven`t been to the property until I know we have a workable deal. That`s the next step.

The deal we`ve agreed to in principle is this:

Offer: 260K
Cash: $2K (bring mort up to date)
VTB: 130K

Purchase via agreement for sale, taking over existing financing. Seller gets his remaining equity at some later date when we cash out of the property. Seller understands we don`t know when this is and he`ll wait. He has not asked for any monthly payment besides covering the existing financing. Seller is motivated to move quickly and happy to have pmt covered so he can find a cheaper place to rent.

Our exit options (in preference order) are:

1) Fix and flip - sell into the spring market
2) Find a LTO buyer
3) Bring in a JV and hold long term (good to excellent cash flow potential)

My main concern is regarding the LOC. I want to make sure that the seller can`t re-use that credit after the sale. Any ideas on how to deal with that part?

Any other ideas or advice? I`ll be checking title and comps tomorrow.

 

[tonypeters]

Hey Jim, I trust you had a wonderful Holiday Season and a great start to the New Year?

I would be more than happy to review this particular deal with you. If that is of interest to you please let me know?

QUOTE (JimWhitelaw @ Jan 5 2010, 08:58 PM) I have been in discussions with a seller that came to me via an online lead from my website. I have not yet been out to see the property, though I do know the area of the city (Edmonton) fairly well, so I`ve got a decent feel for the type of property and price ranges. Ironically, it`s also in the location I`ve been targeting with my yellow letters.

Here`s the particulars on the deal:

1018 sq ft Bungalow w/ 1 BR basement suite, single garage. Needs some updating - flooring & paint.

Asking price: 270K
Existing financing: 125K
Repairs needed: ~15K
ARV: ~310K

Taxes $2100/yr, included in 1st mort pmt.

Current financing is as follows:

1st mort 90K, pmt 975/mo, 3 yrs left in term, seller is behind 2 pmts
LOC 20K, has been paying ~ 275/mo (seems high for an int-only LOC)

I`ve followed Tony`s advice and haven`t been to the property until I know we have a workable deal. That`s the next step.

The deal we`ve agreed to in principle is this:

Offer: 260K
Cash: $2K (bring mort up to date)
VTB: 130K

Purchase via agreement for sale, taking over existing financing. Seller gets his remaining equity at some later date when we cash out of the property. Seller understands we don`t know when this is and he`ll wait. He has not asked for any monthly payment besides covering the existing financing. Seller is motivated to move quickly and happy to have pmt covered so he can find a cheaper place to rent.

Our exit options (in preference order) are:

1) Fix and flip - sell into the spring market
2) Find a LTO buyer
3) Bring in a JV and hold long term (good to excellent cash flow potential)

My main concern is regarding the LOC. I want to make sure that the seller can`t re-use that credit after the sale. Any ideas on how to deal with that part?

Any other ideas or advice? I`ll be checking title and comps tomorrow.

 

[JimWhitelaw]

I just wanted to note for the readers that I had a great meeting with Tony yesterday where he generously gave of his time and ideas. I definitely left knowing more than I did before the meeting. I`m meeting with the seller tomorrow and I have several win/win options to present to him. Thanks, Tony!

 

[neill]

HI Jim - best of luck to you - keep us informed!

Lynda and I are attending Tony`s course tomorrow and we are excited!


Neill

 

[tonypeters]

You`re very welcome Jim! It looks like you have yourself a great opportunity to create a Win, Win for all stakeholders.

Good Luck!

QUOTE (JimWhitelaw @ Jan 8 2010, 01:59 PM) I just wanted to note for the readers that I had a great meeting with Tony yesterday where he generously gave of his time and ideas. I definitely left knowing more than I did before the meeting. I`m meeting with the seller tomorrow and I have several win/win options to present to him. Thanks, Tony!

 

[JimWhitelaw]

An update - I got an offer accepted on this house - $215K cash deal. It`s a true UGLY house inside. Needs major renos - kitchen, bath, flooring, paint. Recent comps nearby range from $285K to $330K. My goal now is to flip it to a renovator ASAP. Yes, I`ll remember to leave something on the table for them.

Contact me if you`re interested!

Doing a cash deal was actually my last choice option, but the price was far enough below market even after repairs that there has to be a way to make some profit on it. One of the pieces of advice I got from Tony was to go in with multiple option scenarios and let the seller choose. I even let him choose the price! No pressure was needed at all, he is happy to know he now has a solution to his problem.

 

[neill]

Hi Jim - congratulations!!!

 

[tonypeters]

Congratulations Jim! I am happy to hear you were able to structure a Win, Win deal that works for all stakeholders.

QUOTE (JimWhitelaw @ Jan 9 2010, 03:55 PM) An update - I got an offer accepted on this house - $215K cash deal. It`s a true UGLY house inside. Needs major renos - kitchen, bath, flooring, paint. Recent comps nearby range from $285K to $330K. My goal now is to flip it to a renovator ASAP. Yes, I`ll remember to leave something on the table for them.

Contact me if you`re interested!

Doing a cash deal was actually my last choice option, but the price was far enough below market even after repairs that there has to be a way to make some profit on it. One of the pieces of advice I got from Tony was to go in with multiple option scenarios and let the seller choose. I even let him choose the price! No pressure was needed at all, he is happy to know he now has a solution to his problem.

 

[DavidMacDonald]

Way to go Jim!!

It`s awesome to see that this deal came as a result of your marketing and your website! This person came to you and you help solve their problem...nice work!

 

[JimWhitelaw]

Update: I have a cash buyer for this property; we`re going to write up the paperwork today. For those that have done quick flips on a property before, do you think it`s better to assign the contract for a fee or do a simultaneous close with my buyer? What are the pros/cons of either method?

 

[tonypeters]

Jim,

Is the "cash buyer" an "end-user" (moving in to the property themselves) or are they an investor that is going to renovate and flip?

QUOTE (JimWhitelaw @ Jan 13 2010, 07:35 AM) Update: I have a cash buyer for this property; we`re going to write up the paperwork today. For those that have done quick flips on a property before, do you think it`s better to assign the contract for a fee or do a simultaneous close with my buyer? What are the pros/cons of either method?

 

[JimWhitelaw]

QUOTE (tonypeters @ Jan 13 2010, 08:32 AM) Is the "cash buyer" an "end-user" (moving in to the property themselves) or are they an investor that is going to renovate and flip?They are going to renovate and flip. Yes, I left something on the table for them.

 

[tonypeters]

CONGRATULATIONS Jim!

See how easy it is to crank a "PAY CHEQUE" when you do business in an ethical way!

I just finished telling another REIN member...
"If you keep your marketing machine cranked up, you will be truly amazed at the deals you will transact on. Most of them will be "smaller" deals, but once in awhile a "REALLY BIG DEAL" will come your way! There is a good reason for the old saying…"Good things come to those that wait". Good things also come to those that "give back to society and help others in their times of need" too!"

These stories are inspiring to others that have elected to travel the Creative Real Estate Investing (Quick Turn) path, so I encourage all forum members to share their success stories, no matter how BIG or SMALL!

Remember what Don Campbell always says...Celebrate ALL Wins!

I look forward to celebrating in your future success!

QUOTE (JimWhitelaw @ Jan 13 2010, 08:52 AM) They are going to renovate and flip. Yes, I left something on the table for them.

 

[mcilroy]

Congrats Jim, well done.

 

[gwasser]

QUOTE (JimWhitelaw @ Jan 13 2010, 07:35 AM) Update: I have a cash buyer for this property; we`re going to write up the paperwork today. For those that have done quick flips on a property before, do you think it`s better to assign the contract for a fee or do a simultaneous close with my buyer? What are the pros/cons of either method?


You have to make sure you don`t charge a service fee for a real estate transaction of property you do not own. In that case, the local real estate board may go after you for trading without a license. I suspect, you will have first to take ownership before you can sell the place. I suggest you discuss this with your lawyer.

Hope this helps.

 

[tonypeters]

Hey Jim,

Just wondering if you have received your "give-up your day job soon" cheque yet?

QUOTE (JimWhitelaw @ Jan 13 2010, 08:52 AM) They are going to renovate and flip. Yes, I left something on the table for them.

 

[JimWhitelaw]

We`re scheduled to close in ten days.

 

[tonypeters]

That sounds great Jim!

Remember to take a photo copy of the cheque and put it somewhere that you can see it every day. It will serve as a great MOTIVATOR for you!

Make sure you keep your marketing machine CRANKED up! If you do, you will find many more deals just like this one!

P.S. Once in awhile you will come accross deals that will make this one look pretty anemic! How do you think I know this?

QUOTE (JimWhitelaw @ Feb 5 2010, 04:48 PM) We`re scheduled to close in ten days.