First Lead, options

[Derrick R.]

Alright BPers, what would you do with this lead?

I started a Facebook campaign just last night and got a phone call about a property in an area where we are looking at doing rehabs. The owner is living there currently and is ready to move as soon as possible, for whatever reason. The owner told me that the house needed a bit of work including one of the bathrooms that he started to repair but stopped because he did not want to take on the task to repair the house anymore.

He owes "Somewhere over $60,000" and from looking at local listings and recently sold homes on zillow, I'd say the top price on a nice rehab is $90-95k, if that. Assuming rehab costs around $20k, I'm pretty confident that it's not gonna work for a flip. 

I'm going to shoot it to my realtor to get some solid comps but in the meantime, looking to get some opinions. I scheduled a walkthrough with the owner a few days from now but I don't want to waste his time. If my numbers are right, do I cancel the walkthrough and just tell him it won't work or do I go take a look and decide to push the lead to someone else? It seems like the only person to send him to would be my realtor to list the house or go the short sell route if he is in financial trouble. Thoughts?

[Tarl Yarber]

@Derrick R.

First off, GREAT JOB with your marketing and getting that lead!  I want to also disclose that I specialize in house flipping and we do a lot of off market marketing and come across situations such as this more often than not.

Based solely on the numbers that you provided, this will probably not work for a flip.  However, maybe there are things you are missing, I do not know your experience level but there have been many times (once last week on a house we just closed on today) that I have been sent a property from a wholesaler who has their numbers wrong and that there is actually a lot more opportunity than they originally thought (rehab is less cost then they thought, resale numbers are bad comps and house can sell for more, homeowner could still be negotiated, etc). 

With all of that said, I would take the appointment for a few reasons. 

1. confirm the rehab in person 

 2. build rapport with the home owner, find out their real story and numbers, many times they don't open up to you on first phone call, it can take an in person meeting to find out the real details

3. maybe there is hidden value in the property (a second buildable lot, a unfinished basement, a really large attic that can be converted into a 1/2 story, who knows).

4. If you learn to do subject-to's this may be a candidate. Good to meet in person to help negotiate later.  If you don't know about those, read some blogs on BP and find someone local who does know them, then sell the lead to them or partner and ask them to show you how to do it.

5. You can also sell the lead to a shortsale negotiator if that is the route. I do this regularly, I write the offer I want on the property, give it to them and also have them pay a marketing fee for the lead since we are a lead gen company, and then put them to work on getting the deal closed (hopefully within 3 months, but sometimes it takes longer...)

6. Possible rental opp, you can wholesale to a landlord if that's not for you and if numbers fit

7. Learning experience....! You can learn a ton the more properties you walk and the more you speak with potential sellers.

Hope this helps and let us know how it goes after the appointment!