What offer should I make to the owner about this property?

[Account Closed]

I am looking at a property, that is worth about $130,000 to $150,000 depending on how much I end up putting to remodel the place. It's on .36 acres of a lot with 1,366 square of single family unit. There is a pond behind it and it's in a decent neighborhood. The owner has paid so far $70,000 on his mortgage(bought the property for $105,000) but due to personal reason he hasn't been able to make last few months mortgages, in total he is $5,000 behind. He is looking to get out. I haven't decided on what I plan on doing with it but either way it'll need pretty hefty interior remodeling and minor exterior fix ups. After that I might put it out for rent or just sell it(Fix n Flip). My question is what would you offer to the owner? What number would you throw to buy him out. In a way where he is happy and where I am happy. He plans on retiring by 2020. Thank you! A bonus question : How many months does the bank give a person to pay their mortgage that they are behind on before they foreclose it?

[Valerie Hiscoe]

I think I'm confused. I thought a short sale was when a mortgage holder sold their property for less than they owed on the mortgage. I guess it must mean something else because if the comps are $130-150k, it seems like the owner should still be able to get more than $35k by selling it on the open market, even if the interior is in less than desirable condition. If following that 30% profit rule of thumb (so $39,000 profit on an ARV of $130k), there'd have to be $55 worth of work that would need to be done to justifiably offer $35k. Is there that much work

Asad, can I clarify with you exactly what it is that the owner wants to do?  Is it to sell you the property outright or does he want you to assume the mortgage or what?  It raises a few alarm bells to me that he's not just listing it to sell if he wants out and his debts are adding up.  There must be a piece of the equation that I'm not getting.

You mentioned that the owner bought the house for $105,000 - was that the price he paid for the property or is it the amount of the mortgage that you're referring to?

Whatever you do, I'd search through the foreclosure forum for advice on what you need to check before getting involved in a house that may be on the courtroom steps the day after tomorrow. (You may trust the person, but verify all the info for yourself because they may not fully understand what they're telling you).  So, basically, don't put the onus on others to be completely trustworthy when their whole world has started to crash and burn - do your own research on the status of the property and here's hoping that you'll be able to help your contact out..  Don't forgetThis might be a golden opportunity for you, but it might also be the cause of problems out the ying yang if there are all kinds of liens etc on the place.

As well, before you go forward with anything I'd recommend getting a really clear picture of the ARV. You'll need the comparables anyways to decide on repairs that you might need or need NOT do. Then walk the property with a contractor. You need to get some real numbers, not just rough estimates. There could be things much worse than those readily visible and you can't estimate how much to offer without putting this very critical figure into the equation. By the way, the 70%-rule calculator is in the 'Tools' tab above: "Tools - more calculators - 70% rule calculator" are how you get there. Just FYI. The flipping calculator is similar but goes into a little more detail

My final piece of advise is to make a concerted effort at defining your investment strategy. Fix n flip, Buy & hold, BRRR, etc. Try to figure out which one feels right.