Need funding for the deal that dropped in my lap

[Leonard Pearson]

Hello All,

I've got a dilemma.  I live in a pretty nice neighborhood in St. Augustine, FL. that is going up in value past the post bust values. I started doing a good deed for a neighbor that lives out of town, cleaning up her property after some bad tenants left.  The house was wrecked and left an absolute mess.  My neighbor lives out of state and doesn't have the money to make the necessary repairs.  Because the house is in such bad shape, she cannot rent it out and she just wants out of it.  She has no intention of living there and she needs money for another loan.  She needs to sell the house!

I want to buy the house from her but I just started a new business at the beginning of the year an I wouldn't be able to qualify for a mortgage.  I have some cash but not enough to buy the house or even enough for a 20% down payment.  If I could buy it outright and pay for all of the repairs, I could sell it in about six months and double my money, realistically priced houses in my neighborhood are selling as soon as they come to market.

The ARV of the property is approximately $325,000. I'm confident I can buy the house from her for $130,000 and it will need approximately $50 - $60,000 in repairs (I would be doing some myself and hiring a roofing contractor, plumber and electrician for the serious stuff). The house is a three bed two bath ranch with a detached garage and a pool. It needs a new roof, new sub floor and flooring, rewiring, windows, kitchen cabinets and some plumbing work done. I've got some estimates on the work I would have to hire out, and I've priced materials. I can put together a business plan for anyone that is willing to invest.

I'm looking for a short term loan of about$175,000 that could be paid off in full in 6-9 months tops.  I have several exit strategies for when the work is done and I am in the process of putting together a formal business plan and proposal.  If anyone is interested in a high interest investment, let me know and I'll give you all of the details.  You can reach me here on BP.  Hope to hear from you soon  Thanks

[Gregory Dunton]

@Leonard Pearsonhttp://jaxreia.org/ as one close by.

Other possible options that come to mind:

1) Seller finance it.  Does she need the whole sales price for her new loan?  Seller financing part of it would reduce your funding needs to a more manageable number.  If she needs help covering monthly expenses, you could always work out a deal to help her cover those (either out of your pocket or add it to the repair budget).

2) Partner with someone.  Either someone with the money, or another flipper that could help complete this deal.  Yes you give up some of the upside, but it also helps you complete the deal.

3) If all else fails and you can't find the financing, wholesale it.  Assuming your numbers are right, there is a huge spread on this.  Not familiar with your area, but using the 70% rule, you could market it for $185K and make over $50K. 

There are probably 1,000 other options, which is why RE is so interesting!

Best of luck and let us know how it turns out!