Buying a friend's townhome?

Question

Friend lives in south Charlotte. Has a townhome they are wanting to sell within the next 6 months.
Ones nearby of almost identical location & build (2 story) are going for $305k fully updated flooring and appliances.
Friends condo has the original carpet, pet stains, original paint, appliances and cabinetry.
Has new AC.
We don't have a ton of money to buy it.
How do we figure out what we should offer for it? Don't want to shaft them at all.
Want to BRRR it.
Will they get the townhome sold for much more than we could offer? Friend has no intentions of renovating.
Is there a way to determine (and present to them) what others buying in that market are going to offer?

How should we approach it? Pretty sure friend has their original mortgage from the purchase when like new.

River Sava · Answer

Hi Butch - Seems like you looked into DSCR a bit. It can be a bit confusing, but I would love to connect and help you out to see if this would be the right path to take. Send me a DM if interested and we can chat!

Ryan Davies · Answer

@Butch Greene It will depend on if you do hard money, dscr, or fannie and freddie loans. It's best to not have a balloon on the seller financing. For them to qualify to purchase another house, there are a lot of factors. It will usually land on "note income" or "rental property income" depending on how everything is structured.

Butch Greene · Answer

Just very confused on who we are supposed to work with to "qualify" to buy a property that in theory is paying for itself.Prime Lending and Movement Mortgage just seem to be residential home lenders, not commercial investment property lenders.  And...is there even a difference?If we do numbers on a property that pays for itself....what does our personal income situation matter?  We wouldn't be attempting to do this if our normal sources of income were covering our daughters educational needs & economic needs.Feel like I'm asking the wrong questions to the wrong parties.

Butch Greene · Answer

Tried to read up on DSCR just now but got a little too much lingo.I'm great with math if there's an actual calculator? So when you say Fix & Flip, that the 12 month hard money loans for people with an LLC/business to lend to where the hard money lender wants to do a high interest 12 month rehab but you've got to get your approval for the final closing lined up before they sign off on the project?

Butch Greene · Answer

So we just checked with Prime Lending & Movement Mortgage.We've got a couple dings on credit that make us ineligible for the cookie cutter stuff.What financing direction do we go now?Pretty sure with new floors, fresh paint and maybe countertops, we can get it rented fully.

Butch Greene · Answer

Friends property is a Townhome, not a condo.  We've never owned a townhome.How does that change it?From what little I know of condo's, going to stay far away from them at first.  Condos only seem to make sense if you've a big buffer of cash in the bank.Another question would like feedback on is using property management vs handling ourselves.Seems smarter to let a property management company handle the tenant if we're starting out.

Jason Wray · Answer

Butch,

You really want to focus on the sales inside the condominium complex before you look outside at other condo's.  An appraiser is going to use the condo's inside sales first before they look at sales from another complex.  If the sales in the complex are generally older than 12 months appraiser may use an outside comp and gross adjust.

A realtor who has or had sales in the complex should be able to help with that answer or simply check online.  Use one of the major sites like Zil, RedF, or realtor .coms to see if they offer an estimate.  You can also reach and talk to a banker and have them pull an AVM to check on comps.  Does your friend have a bottom line that they feel very comfortable telling you as a "good friend price".

Condo's do not require much down you can go FHA 3.5% or 5% conventional as long as it is not a "Non-Warrantable{ style Condo.

Butch Greene · Answer

When you seller finance a property, what are the lender required holding period and other stipulations to refinance out of the seller finance? Seasoning?   I assume if we could do seller financing, she'll immediately want to buy something where she moves to in less time than we have to get it refi-ed at the improved value.

Ryan Davies · Answer

I would buy it creatively on seller financing and find a win-win. Will save you a ton of money and you just have to solve any problem he has with down payment on something else, etc. Happy to strategize with you.

Buying a friend's townhome?

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