Guidance needed! Unexpected lead!

[Jason Krick]

Hello everyone.  This was not expected to be my first post.   My profile hasn't been completed and I haven't networked yet.  I've been lurking, reading, and listening for months, trying to learn as much as I can before I dive into this business.  However, a possible lead just came up and I'd like to ask some guidance.  I have lots of questions.  Here it goes:

There is a house on the street directly behind me that showed up on the Sheriff's Sale list in December.  They just put a handwritten sign up in their yard that states:  "Lease to Buy.  Available Immediately."  On Zillow, it states the house is 2,714 sq ft with 4 bedrooms and 3 baths.  This is bigger than most houses in my development.  Most are in the 2,000 sq ft range.  I've been keeping a close eye on sales in my neighborhood, as it seems like it is "turning over" from older owners to younger families.  They appear to be selling for around $90/sq ft+, depending on condition.  This house was last purchased in 1995 for $125,000.  

My ideal scenario, would be to negotiate a price below market, rehab it, and then sell it. I'm not concerned in the numbers at this point, but more so with the process. Let's say I contact the owner, and the numbers make sense for me. Then what? I do not have the cash at this point that would be required (which is why I planned on waiting before jumping in). I would assume I would need an initial payment to cover any money owed, to stop the sale. So, could I try to access private lending, or HML to cover those costs, plus rehab and holding costs? I have zero experience to date, so I know it may be difficult to get a loan, but it would seem that I would need a lot less than 70% ARV in this scenario.

Also, what risks do I assume in this kind of arrangement.  What if I pay the money to stop the sale, and they decide to keep the money for themselves?  Could it still be sold and I am out of luck?  If I rehab it in a month or so, do I have the authority to sell a house that I currently only have a lease option on?

I guess what I am asking is if anyone could just walk me through step-by-step how you would go through a process like this?  If the numbers don't work, it's obviously moot.  I can analyze those after I contact them.  I just need some guidance on how to go through this process.

I do have access to a REA who specializes in foreclosures, short sales, and investors who flip houses.  I also have some contacts for rehab work.  

Thanks in advance!

Jason

[Andy Robison]

@Jason Krick 

Either way get some numbers run them see what you come up with. Post those numbers here in BP and have members give you feed back. Even if you dont end up purchasing the property it will be a good way to start understanding the money aspect of REI. And the wonderful members of BP will ask you questions that you may not have even known that needed to be asked...

Thats how I started, and my first property I bought was from advice I got here in BP. Had to go and find numbers out that I didnt think mattered or didn't even know I should know. Learned a lot. Really a lot. A stupid ammount, my head hurt from how much I was learning. Now I have a property that throws off $300/month cashflow after I put back all the money for repairs vacancy, mortage, insurance, property managment, etc etc. Using lessons learned from that property and advice I've recieved from members here in BP, we are looking at purchasing a duplex by the end of the year that will throw off $300/door. Then next year if the money is there we will be looking to buy a four plex or another duplex hopefully in a "B/C+" area.