Investment property HOW TO GET THE MAXIMUM CASH RETURN

[Jevon Smith]

First, let me introduce myself. My name is Jevon Smith. I am a deputy for the Sheriff Department in Texas. I am a beginner real estate investor. I have done some reach search in buying property at a discount rate.

This is my situation. My grandmother is 80 years old. She told me that she wants to sell her house. She doesn't want to deal with it anymore. But she wants to keep it in the family, so she offered it to me. She told me she would sell it to me way below market value. All she wants out of the deal is $10,000.

This is the information about the house.

The home is located in Huntsville, Alabama, in a quiet suburb, and walking distance from Oakwood College. It is on a corner lot.

It was totally remodeled and upgraded inside.

It is [blank] square ft.

It has three bedrooms, 2 baths. The garage has been converted to a studio with full operating kitchen and shower.

It has been appraised at $122k. It was appraised this month.

My grandmother owes $83k on it. She is willing to sell it at $80k.

The comps in the area are [blank].

She wants $10k if I can make this deal go through.

Please tell me if I am worn with this.
She wants to sell it for $80k; the house is valued at $122k. If I get it for $80k, there is $42k of equity in the home.
That falls into the 70% rule, right?

The way I see this working is to purchase this property at $80k pull the $42k, give my grandmother 10k and pocket the $32k for another property. Then use it as a rental property.

Now if I am on track about this. How can I go about doing this deal with no money down?

How do I deal with the bank and get it under contract?

Do I need to bring a realtor into the picture?

Can I do the paperwork myself?

Bottom line how do I get this ball rolling to make this deal go through?

I believe this is a good deal, and I am helping my grandmother. I believe it's a win-win situation.

Any input would be helpful.

Thank You

[Geordy Rostad]

Yes, this seems like a pretty good deal if the property is already remodeled and ready to rent out. Can you rent the studio to someone separate? That could be a cash cow.

You won't be able to pull the $42k out though. Unless you find someone who will do a 95% LTV investor property loan, you should plan to leave 20% equity in the deal. If the house is worth $122k, 80% is $97k. That is the amount you could expect to go to the bank for. BUT, you probably wouldn't get it until it's all been seasoned for 6 months.

Up front, you could purchase it via an FHA loan with 3.5% down but you'd have to move in.

The easiest way to do it zero down is if your grandma owner financed but if the title transfers that could trigger the due on sale clause.

Is she willing to lease option it to you? That way you could get control of the property and could build some equity in it for some period of time. By the time you need to exercise the option, hopefully you're in better shape. Maybe save all the excess rent you are collecting to use as a down.

I'm sure there are some even more creative ways to approach this.