Ideal Real Estate Strategy

[Account Closed]

BP Community:
I wanted to reach out to the BP Community to see what would be the best real estate investing strategy in order to make this deal happen.

Here is the Brooklyn Brownstone deal scenario.

Situation: The homeowner had terminal cancer and was motivated to sell. The homeowner want me to show proof of fund in order to go into contract.

I was unable to secure POF or any type of financing to be able to get this property under contract.

Property Type: Brownstone 3 family 3/3/3 with an unfinished basement.

Location:On the edge of Clinton Hill/Bed Stuy border 2 blocks from subway

Price of Property: $210,000

Repairs: $100,000 (Have two quotes of $80K and $100K)

Liens:
1st Mortgage $74,000
2nd Mortgage $12,000
NY State Dept of Tax $1,613 (Can be shorted)
Violations $14,456 (Can be shorted)
Fed Tax Lien $15,792 (Can be shorted)
Tab Violation $125 (Can be shorted)
Total Liens $117,986 (Liens can be shorted down to $90K)

Total (Before Short) $427,986
Total (After Short) $400,000

Assignment Fee (3%) $12,500
Gus Commission(3%) $12,500

Total Sales Price $425,000

Low End ARV : $600,000 LTV =70%
High End ARV : $650,000 LTV= 65%

This property was in a good area and had a lot of equity built into the property.

What would be the best method to use in order to make this deal work for all parties?

David H.

[Don Konipol]

As more and more investors tie up a property with no cash to bring to the table and no ability to obtain financing, sellers are protecting themselves by trying to figure out whether a buyer has a realistic change to close or is merely obtaining "an option" to see if he can flip or wholesale the house to someone else at a higher price. although sellers who insist on POF do eliminate the market of wholesalers who may be able to find the ultimate buyer, they also eliminate having their property tied up under contract with someone who is essentially getting a free option. Having POF won't eliminate wholesalers disquised as buyers, but it will eliminate those without any financial strength. when we sell a property we are very cautious on mid to higher priced properties that we are dealing with buyers with the ability to close, on low priced properties we are willing to roll the dice and don't require POF.