Good deals in the Denver area (

Question

Are there any buyers here that would be interested in purchasing homes in the Denver area via assignment of contract? I can provide homes on a consistent basis at 65-70% LTV with close to no repairs needed (just minor clean up or repair needed - less than $1-2k). The "typical" home I've seen is a 1800 sq/ft all brick home built in 1920 with recent updating work done (nice kitchen, hardwood floors, etc...) with a likely purchase price of $260k and a value of $380k. The homes are being sold by the sellers or their agents (I could do REOs, but they generally don't like to have people assign contracts) and the homes would have been listed on the MLS.

I would put the home under contract and assign it to you. The contract would be written so that you, the buyer, is protected - I'm working with a very good agent. Earnest money would probably be around $1k with a 30-45 day or less close needed.

I wouldn't be looking for a bird-dog who can find me a buyer, I'm looking for the buyers themselves.

Could anyone do this?

Tom Flann · Answer

The owners are in distressed situations, so they need to sell their home. In the Denver area, sellers can list their home on the MLS for $250, so they might not know the true value of their home. As I'm sure you know, there are a number of reasons that homes are priced below market value. There are a lot of homes that are looked at, and most don't make the cut. When I have looked into some of the past homes I've seen, current listings and recently sold homes support the values. As for exit strategy, I'm assigning contracts to investors looking homes that have equity in properties. Also, I've moved this to the other forum you mentioned. Thanks Wheatie

Account Closed · Answer

The most successful business know what they are good at and they focus on their core strategies. Keep the focus and good luck. I sent you an email reply to the PM. We can discuss some deals there. John Corey

Tom Flann · Answer

With the "$118k" comes higher risks - less the holding and selling costs. The buyer would need to secure financing (hard money or traditional financing), have enough to cover the payments until it sells, they need to sell the home which might take a couple months or more, etc... Do you see where I'm going? The buyer would have more at stake. The simple finance maxim comes to mind, "higher risk, higher reward"... Like I said earlier, I'm not in the position to do these financially. I would rather take less risk and for a smaller reward than purchase the home myself and take on the additional risks. Generally, 75-100+ homes are looked at before there is 1 that has the equity spread mentioned above.

Michael Rossi · Answer

It's better to make a few thousand wholesaling that $118K for an easy retail sale? I can't say I understand that. Mike

Michael Rossi · Answer

tflann, If you can find deals for $260K that are worth $380K and only need 1-2K in repairs, why don't you just spend the 1-2K and then make $118K? It certainly sounds easy! Mike

Tom Flann · Answer

I would rather wholesale the homes - that would work better for me at this point. If you're interested, I can probably find some rehabs that would have similar spreads including repairs.

Tom Flann · Answer

You do raise some good points that I will look into. Another option is for me to focus on finding rehabs that would have similar spreads including repairs. Possibly looking for homes that have lower values depending on the needs of the investor, i.e. $150k to $300k. Thanks. -Tom

Jon Holdman · Answer

Since this is the deal analysis forum and not the deal making forum, I'll just ask about the details of the deals. Please post in the deal making forum if you're looking for buyers or partners. What's the exit strategy here? If the house is listed on the MLS, doesn't need any work, and it sells for $260K, that sure sounds like the value is $260K. How could this be resold for $380K? $260K is above where you would expect to be able to find many lease option buyers. These don't sound like rentals. You would need rent something like $5000/month to be truly cash flow positive. Typical rents for properties like you describe are around $1000 +/- about $300, depending on where it is. Jon

Jon Holdman · Answer

I wasn't very clear. I see your exit strategy. What's the exit strategy for your buyers? It almost has to be to resell to retail buyers, I think, given the price range relative to rents we get here. If you buy a house cheap and do some work, then its possible to get it to appraise at a higher value. But if there's no work done, I don't see how you convince the end buyer's lender that there is an increase in value. I'm not trying to put down the deals. They do seem like good deals if they could be resold. I just don't see how to get around this appraisal issue. Help me out. They seem like they're going to be badly in the hole for rentals or lease purchases. Jon

Good deals in the Denver area (&lt;70%) - would this work?

Good deals in the Denver area (<70%) - would this work?