How do i find an investor/

Question

i have some friends who have an agency and they have a house that the bank accepted for a short sale but they havent put it on the mls and so really nobody knows about. Why they arent pushing this home is beyond me. My friend says it can easily be bought and sold for 50-100 grand more than what it can be bought for which is probably something like 200. The only reason he hasnt done it is he has no money or credit. So, how do i find an investor to arrange some type of deal to buy and sell and then split the profit. I knew one guy who i took to the place but he ended up putting an offer in elsewhere. Oh and by the way Ive been to this place and the inside is completely re-done, the outside is nice and painted, the only "bad part" of this home is its not in the best area. But that doesnt matter since it can be sold right away for a ton more money..Guys, help..ideas..criticism for god sakes!!

Rich Weese · Answer

imo, you're expecting too much. You want an investor to take all the risk, put up all the money go into title, find a buyer and you get 50%. What exactly did you do to earn the 50%? If the investor has to put up 200K to make "50-100K", that isn't real exciting. What if it doesn't sell quickly? What if the market takes another tumble?
If you really believe the investor will make that amount, then structure the deal where the investor receives all his costs back and the first 50K on top of it, and then you split the balance. If you think it will sell quickly, then the deal goes for 90 days. After 90 days, your % goes down 10% each month. You might find an investor on that basis. Rich.

Account Closed · Answer

u guys are getting my wheels to spin now. keep em coming

Marcus Ware · Answer

Always remember the level of savy you must have when proposing a deal to a potential investor. Find out what kind of returns your investors are looking for. Most do not realize the knowledge and creativity one must posses to structure a solid deal. I push for continous education. Good Luck

Account Closed · Answer

Shawn,

Jon is right. If your friend has no money, and no credit, then the only option is to wholesale the property.

He probably won't make the full $50-$100 k, but he can make a nice portion of that for a house that he never even owned. Kind of hard to complain about that, right?

Good luck bud.

Jon Holdman · Answer

Why not wholesale this deal? If there's that much room, tack on $5-10K and sell it to someone with money.

Now, if you can buy this place for $200K and it would sell for $250K, then its really not much of a deal. I know that seems like a big spread, by you're paying 80% of the eventual sales price. Between the transaction costs on two transactions, your cut, and the holding costs, there's almost zero profit with only a 20% spread.

If it will sell for $300K, then there's enough to get a profit in the $30-40K range. If you take $5K, that still leaves your buyer enough to be interesting.

The fact you say it need no work is actually a bad thing. If it sells for $200K, that really establishes a value. If you were to do some work on it, then you could justify a higher value. If there's no work done at all, the new lender will really question a new, higher value. If someone buys this with the expectation of selling it at a significantly higher price to a retail buyer (i.e., an owner occupant with a conventional loan), they will need to count on holding it at least six months, and perhaps a year.

How do i find an investor/

How do i find an investor/

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