Help!!! Deal Structure

[ritter1and2 0]

Hello everyone!

 

I was marketing to listed houses (letter to homeowner) and got a call yesterday from the listing agent. She didn't sound mad on the voicemail she left, so after doing some research on the house, I returned the call this morning. I haven't been in the house, and all the pictures on the listing were exterior, but here is what I believe to be true so far....

 

3 bed

2.5 bath

2 car carport

2519 s.f. (2 story)

Built in 1964 (owned by original family)

1.43 acres on lake

 

Days On Market: 371

 

Original List Price: $455,000

Current List Price: $319,900

 

The listing agent said the owner was open to a lease option, but that the house needed "extensive renovation", so a L/O probably wasn't going to work.

 

ME: Sooooo.....how much are we talking about?

HER: Oh...about $100,000

ME: HOLY SHI.....(to myself) Then the house must be vacant...

HER: Hey, he's still talking to me after that bomb...(to herself) No, the owner still lives there.

 

Value? hard to say. The area is full of large lots, some on the lake, some not, and each house is very unique. Obviously most of the value here is in the land. For what it's "worth", the tax assessor's office has the market value and assessed value at about 278k. 90k for the house, and 188k for the land.

 

I know from previous posts that houses that need paint/carpet/updates are great for a CA, but what about a house like this?

 

Any ideas on how to structure 1 or more offers? I have my own ideas, but would really appreciate input from others.

 

Thank you!

[Jonathan RexfordFL 8]

Not a LO deal for sure.

Wholesale it.

You need to establish a value on the property before you can really move forward.

 

What will the property sell for after it is fixed up. Call the agent back and ask her.

Take that value and pull the repairs, desired profit for rehabber, holding costs and what type of assignment fee you want from deal then you have your offer of what you can make.

[MichaelC 160]

First things first. As Jonathan said, you need to determine for yourself present as-is value, cost of repairs, and finally after repair value. Once you have those numbers in hand, you'll have a better idea what you can do with this property.

In the past I have taken on a few ugly projects like this one seems to be, via a Pure Option or even as a lease with option to purchase. With the former you need a rock bottom price and then find yourself a buyer willing to pay more. Pretty straightforward.

With the latter, not needing to buy for cash upfront you can put your money into the repairs and then sell for profit. Of course, this method requires a backup plan in case you can't find a buyer. You don't want to put $30K of repairs into the house and then not exercise your option. But as long as the numbers are right, there is always a ready market of folks looking to make a buck via sweat equity.