Take the money and run???

Question

Hello all so I closed on a great property Thursday $46,000 that I intend to rent out needs about 4,000 to get rent ready and will rent for $850. On Friday I had a farmer that owns all the land around the house call me and said they wanted the property but only offered list price cause they aren't used to buying properties and didn't know how things work . Anyhow they want the house for their son and have offered me 66,000 to buy it from me. Should I take the cash and chalk it up to the easiest flip ever keep as buy and hold? Also once I put the 4000 in the house it will be worth 90,000 to 100,000

Andy Mink · Answer

If you DONT sell it to him, and he owns all the land around it and you make him angry it could be hard to rent. He might decide to spread manure on the land around the house while you are trying to rent it, run tractors at 4am on those fields, etc. etc. Farmers are usually great people but don't tick them off, they are crafty....

Andy Mirza · Answer

My vote is to do the $4k of work and counter the farmer at $100k. If he's motivated, he'll counter your counter and you can keep going until you get to a number that'll work for you. If not, you just rent it out like you originally intended.You found a great deal once, you can do it again. Take your proceeds and buy more! You will grow your portfolio faster.

Jay Hinrichs · Answer

@Brian Ellis I would sell it in a heartbeat... bird in the hand and all of that.. deals are like street cars one on every corner especially out in the mid west... You may want to counter a little bit

Elizabeth Colegrove · Answer

If the house is worth 100k, than that is what I would want from it! Personally as a buy and hold investor the cash flow is more important than the "Value" unless you can duplicate it over and over.I would be careful about taking less than you an get on fair market. You hear about people whole sailing property again. So if it is worth closer to 100k for 4k of work, than I would want at least 90k, if I was going to lose my cash flow (my key objective). Just a buy and hold investors, thoughts! :0Congrats on a awesome deal.

Thomas Oliver · Answer

I say keep it. I'm new to the game. Here is what I seen in the deal for you. Your loan is 46K. The property value is 100k So you have 54k in equity 34k in borrow able equity. So I would keep it rent it out. If you need the extra money for another deal. Refi and get your cash. Let it pay itself back. That way you still have a property. Producing incone.

Mark Brogan · Answer

i am with @Elizabeth Colegrove on this one if i am selling cash flow property i want close to market value

Brent Coombs · Answer

@Brian Ellis I agree with @Elizabeth Colegrove on this one. [But are you saying from your post that you paid MORE than list price? How was that necessary? It was listed for LESS than $46k? And the Agent didn't go back to the Farmer after you put in your Offer]? If the farmer is REALLY a motivated Buyer (questionable, because otherwise he should have bought it in the first place - my guess is he just tried to be a bit too clever), then he should now pay AT LEAST fair market value ($100k less what you allow for repairs). You can consider yourself in the same position as when Developers want to buy the last remaining lot from a reluctant Seller (you) but who are forced to pay a lot MORE than normal market value (and clever owners in the middle of a development area know this). You are really in the box seat with this one, so remember that once it's gone, you have to start all over again! Remember also, the reason you bought it in the first place. Where else are you going to get rental returns like that for that outlay? Cheers...

Dooreuhn Cee · Answer

You CAN get 100k, but will you really? Only your experience can tell you if the paper value would ever be a reality on the market. Also, the current deal is doable without a broker saving you 6% or 6k. I might be happy splitting it between the offer and market price.

Vicki Stewart · Answer

@Andy Mink My thoughts exactly. The farmer and even other owners in the area could make it difficult to keep the place rented. I'd counter to see if I could get 80,000 out of it.

Elizabeth Colegrove · Answer

We had the option to see our first house and take $30k and "run" with it. Our tenant wanted to buy the house, so we wouldn't even have needed to pay real estate fees. The issue was we couldn't buy another cheap house. So while we would have made the 30k we couldn't "replace" the house. It also wasn't enough to buy a rental in the area since that house was bought as our primary. Short term we had a great profit but long term, it hurt our goals. I never regret not selling it, as its an amazing house and does great for us each month ;)Just actual stories ;)