How do I make a bad deal into a good one?

[Account Closed]

Happy Friday Everyone!

I'm a new real estate investor and got a hold of a potential deal! The house is in Cupertino, one of the hottest city's in the California bay area and walking distance from a great school. The house is a complete wreck and needs a lot of work. 

The owner wants 1.35 million dollars for the property, similar properties that have been remodeled are currently going for that price. Even though this seems like a terrible deal (buying a house that needs work at retail value), I'm very optimistic about the potential of this house. The new Apple head quarters will be opened within minutes of this place and will hire 12,000 new employees!

Is there any hope here? How can I turn this bad deal into a good one? Please let me know if you need more information.

Thanks!

[Chris Mason]

Originally posted by @Account Closed:

@Chris Mason I may have over exaggerated a bit. The owner still lives there so I assume everything works, just things are not new and will definitely need remodeling. The back yard is a wreck and has a shed that isn't permitted. This is just the beginning of my interaction with the seller. I'm still very new to this and this has been my only bite out of the thousands of mailers I did (and the only pleasant phone call out of the tens of nasty grams lol) 

I agree with having him come down on the price as it's definitely too high for an all cash offer. I was thinking maybe there was a way where he can get his number but I can still get a good deal (i.e. good terms)

 If the stuff works, that means it's a functionally complete house and not one that "must" go cash or hard money, so the discount for paying cash should still be there, but it wont be as great as if the place had no functional kitchen or was missing toilets (unless you're just the most amazing salesman in the world, of course).

The plus side to it being a complete house and you going in all cash is that you should still get some discount, and can regain access to your capital in the form of a mortgage after-the-fact.

So a con and a pro. Folks paying all cash for a home that is eons away from ever being finance-able NEED that great uber killer deal because of the opportunity cost of being out that much capital until they re-sell the house or otherwise get it generating income, whereas you are likely in a position to be able to regain access to it relatively quickly (if you so desire).