Great deal....but will I have trouble reselling due to lack of rehab?

[Mark Wallis]

New investors here with simple question. Had a great deal fall into our laps. Family needs to sell Dad's 2/2 condo in gated community fast. He now lives elsewhere with 24 hour care and family needs cash now. They told me for $70K cash with quick close and I can purchase his home. Other units in neighborhood are selling for $110K - $120K. This unit is in great shape and I will spend less than $1K before listing. Question: will we have trouble selling to someone who intends on financing if the transaction is less than 90 days from my initial closing? I've read that as long as we can document the rehab process and show reason for the home being priced over 120% of purchase then all is fine. In our case the before and after pictures and our rehab costs will show almost no difference. Anyone have experience with similar deals?
Mark

[Brian Wall]

Hey Mark,
Here are my 2 cents...

You have done a great job in determining why the family is motivated. They want to sell the place, but the end result is so that they can pay for the 24 hour care.

I would figure out how to sell the property without taking title, so that the title can change hands from the family directly to the end buyer, that way you do not have to "prove" anything.

There are a couple ways to do this (I am sure other BP members can chime in with other ways), but here is how I would do it.

You get an option on the condo in the next 90 days. Find out how much the family needs for the next 90 days, and give them that amount as an option fee. You could get them the entire $70k, but then I would extend the option expiration out at least 1 or 2 years. That amount would apply towards the purchase price, when you exercise your option.

With that option, be sure to ask for the right to show the property, and do what you need to do to sell.

You can then do whatever you would normally do to sell the property.

You list for sale at say $110k, then when you sell, the end buyer is paying $110k, just like any "regular" transaction, and 70k, goes to the family (less the option fee you already paid) and the rest goes to you, as the option holder.

Doing the option correctly, means that you would need to record an memorandum of option with the county recorder, to demonstrate that you have equity in the property.

This is a win win, the family gets the money they need ASAP, and you have the opportunity to sell and maximize your return on investment, while never "owning" to the property.

Like JD Rockefeller said: "Own Nothing, Control Everything!"

Let us know how it goes.

Good Luck,
Brian