Dustin 0 Report post Posted March 18, 2014 Hi folks, So... I was listening to some REI audio on Sunday afternoon. I overheard talk about craigslist leads and decided to pause my audio and go cold call. HAHA! So I found someone selling a home @ 220k in my area. I took action and called. In two minutes or so she dropped the sales price to 210K (Thats like making 10K in 2 minutes if you ask me). I believe she is looking to sell for what she owes-ish. I checked the records and she bought about a year ago for 220K. So 210K makes sense. Obviously little equity exists so I threw out a pure option strategy on a quick flip. This deal looks like a L/O deal or CA deal. I figure I will offer to do a cooperative assignment (CA). The house is in good condition and in an area that is upper-class. Average homes in my neck of the woods are like 80 or 90k. Mid range homes are like 100k to 150k. So 220k is up there. I am in Oklahoma. She just bought a new house recently in a different location so she faces two mortgage payments (I feel bleeding coming on!). I plan to offer what I can do and then let the house season a bit while she thinks about it. Afterwards, I believe the seller will contact me again if and when her efforts fail while trying to FSBO the house. She is not working with an agent because she does not want to pay 12k commissions (that would eat her marginal equity, right!). Worst case scenario is that the home will sell for the 210K minimal she is asking. At this point, I am testing her motivation. Oh, and, Michael... if you would like to do a long range deal then I am up for it and I think it would be FUN! Everyone let me know what they feel would be their next step if they were me! I need to return this lady's call in two days. She is under the impression that I am researching the property. I researched it in, like, 15 minutes. HEHE let the advice roll! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 18, 2014 Dustin, the first thing that needs to be determined is what realistically will the market accept for this property? The homeowner paid $220K last year. Was that FMV, a great deal, a ripoff? Once today's true value is determined, both for selling price and rent, then we can see what options we have. Also, do you know anything about her mortgage? What does she owe and her monthly PITI?And, absolutely, I would definitely be up for working with you on this. Doing a deal in Ohio as we speak. Share this post Link to post Share on other sites
Dustin 0 Report post Posted March 19, 2014 Hi MC, The Oklahoma assessor is reflecting 219K from 2013 so I suppose that is a low end ball park figure. Exact figures will require me to do a bit more research at this time. I believe the 220K is about FMV, though. I am awaiting an email about PITI. In her email she dropped down to 200K for a quick close. I am still debating her motivation and if enough exists for a lease option but I will keep plugging away and see. Here is what she emailed me a few days ago: -----------------------------------3 Bed, 2 Bath, 2 Car Garage -2089 sq ft The inside is updated and there is a master suite that was added on in approx. 2003. The add on has vaulted ceilings, walk in closet and a large bathroom with a garden tub. It has a large backyard which is beautiful during the spring/summer/fall. The flooring is all tile, stained concrete and hardwood. It doesn't have a laundry room, the washer and dryer are in a little nook outside of the master suite. It is a quiet neighborhood, with a mixture of young families and older couples. It is located in the coveted Nichols hills elementary school district. Utilities: OGE electric, ONG gas, OKC water and the village trash No home owners association I'm attaching a picture of the front and a sketch that was pulled off the assessor's website. I still owe somewhere around $196,000, so my bottom line is probably going to be around $200,000 (for a quick close) -----------------------------Dangit, I sent her an email and forgot to ask if her payments are current and about any liens, lol. I will let you know. MC, if we move forward I might need to talk more in private. Let me know. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 19, 2014 Feel free to PM me if you want. My initial reaction is I don't see much of a spread here for you. If the FMV is $220K and she owes $200K, there doesn't appear to be much she can do to make the deal attractive for you. Do you think you can market the property for, say, $220K to prospective tenant/buyers? That's the only way I can see this having a chance to work and make it worth your time. Share this post Link to post Share on other sites
Dustin 0 Report post Posted March 19, 2014 Hi MC,I am under the impression thus far that FMV might be around 220K. I need to really confirm it still. The tax assessor is showing market value at 219K for 2013 which is only giving me a ball park number to work with. I was reviewing other homes for sale in that area and the numbers are all over the place so I need to investigate further. My last lease option I did was to secure the property up front and my end-buyer ended up being a retail buyer with A+ credit so I have never had to put tenant/buyers in a property, lol. Heh. Regardless, this is making for good practice so far with more L/O deals. I can PM you as I gather more info. Share this post Link to post Share on other sites
Dustin 0 Report post Posted March 19, 2014 I take that back, I did have a T/B but I ended up evicting (or at least threatening to) him for non-payment. The T/B part still scares me. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 20, 2014 The tax assessor's office can't be counted on to determine FMV. They have their own arcane and random formulas for assessing taxes. Doesn't compute in the real world. You need to use comparable properties that have sold in the past six months for an accurate assessment. Hopefully with some digging around you can find the necessary sales data.As for sandwich deals, they come with their own risks and rewards. The potential for greater profits is there, but so is the potential for greater risk. Problem tenants, vacancies, meddling owners, etc. Weigh the pros and cons and make an informed decision as to the best approach to take. Share this post Link to post Share on other sites
Dustin 0 Report post Posted March 20, 2014 Thank you MC, for your feedback! You have always been so helpful for so many people! I understand and agree about the tax assessors. Sometimes it can be as untrustworthy as Zillow! Share this post Link to post Share on other sites
scotty205 0 Report post Posted March 30, 2014 Hey Dustin, I'm here in OKC if you need help in determining comps...The tax assessor site is awesome in Oklahoma County but still not very accurate.I havent done any lease options yet as I have been trying to wholesale but I'm thinking of trying to work some lease options. Let me know if you need help or would like to get together and talk real estate or work some deals together...I was just wondering what is a good price range to market if the Median house range here is about 140,000?Scotty Share this post Link to post Share on other sites
BrianGibbons 0 Report post Posted April 4, 2014 Thin equity spreads out of town are dangerous, IMHO when starting out in Lease Purchasing, do local deals,a) find the best school districts, look at www.NeighborhoodScout.com and GreatSchools.org for great middle and high schools. Find the median prices there. Look for FSBOS, Listeds, Landlords, Expireds, go door to door, give them a brochure or postcard. Your Card Sell Your House Here is an example. Say, "If you need to sell fast and avoid fees like realtor commissions and closing costs, this post card will help you out. Just call the number!" Business Card Sell Your House FAST!Quick Sale - Fair Price (777) - 444- 5555 Share this post Link to post Share on other sites
DanielSun 7 Report post Posted April 4, 2014 I never dared to put the "I will cover your closing cost" sentense into my pitch or contract. Just breaking their mortgage alone could cost me 5k to 20k in my area. Yesterday I spoke to a seller who is considering lease option because her mortgage penalty would be 17k. You actually gonna pay that? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 5, 2014 Daniel, is that the norm with Canada lenders? Is that law? Share this post Link to post Share on other sites
DanielSun 7 Report post Posted April 7, 2014 hmm I thought I had replied this but it wasn't posted. Anyways, the normal cost of breaking a mortgage term is about 3%. So on a $400,000 balance it would be around $12000. However some people seem to have higher penalty, like the owner I spoke to seem to have around 5% penalty. I don't know the details or the rules regarding these mortgage terms, but sometimes it can be very costly. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 7, 2014 What does the lender consider to be "breaking the term"? Surely it can't be as simple as paying off the note early. Share this post Link to post Share on other sites
DanielSun 7 Report post Posted April 9, 2014 yeah, that's what it means. For a fixed-rate mortgage, you get penalty if you pay it off early. Now that I think about it, it's kinda crazy. Wait wait, it's not like that in the states? Share this post Link to post Share on other sites
