First Potential Flip

[Michael Lerch]

I got a house under contract for 70k. Just needs paint and cleaning I have budgeted around 2k. Minor bathroom and kitchen updates and appliances around 2.5k.

ARV is $95,000.

Here's the kicker, the seller had it listed for almost a year at $115,000 (way above market) and then at $95,000 for 2 months (Nov 2012 to end of Dec 2012), but still no offers. He said once he had it at $95,000 he got a lot more showings, but no offers. I figure it's close to gold because it's winter months with a slow market and I could pretty much flip this as-is on the MLS at $89,900 for quick sale going into the spring months.

Problem is I would need to do a flat fee MLS listing for $300 or so, and get private money around 12% just to make $8,000 to $10,000. Just thinking out loud. Good luck finding a private lender to lend for a deal at 85% ARV right? lol, but here's hoping. There's money to be made so I'm not walking away from it yet.

Thoughts? Anyone else pull off a deal like this before?

[Will Barnard]

Michael, at the numbers posted, you do not have a deal for flipping traditionally, however, giving up and walking away may not be the answer either.

Ask for seller carry back or JV with seller. Offer to put the needed repairs into the property and offer to take on responsibility for the sale of property guaranteeing him his $70k less closing costs. Then fix, list, sell, and keep the difference. You can make $5-$10k or more using very little of your own money ($5k in repairs or so). That is worth it.

As others stated, if this can get anywhere north of $1500 in rent, you may have a deal you can flip to a buy and hold investor too.

Another option: Do a MLO (master lease option where you lease for one rent amount, then sub lease to tenant for a higher amount keeping the spread, owner remains responsible to fix defects in home as would any owner for a tenant unless otherwise agreed to in writing.

Point is, many options here, don't walk away from money. If you do, pass it to me first :)