Need some help approaching a deal

[Paul Moorer]

Detroit area sfr

3,250 sqft 7 bed 6 bath

Owner asking 275k estimating only cosmetic repairs and a plumbing issue last contractor was a friend who caught the covid and stopped work hasn’t touched it since also owner currently lives in Florida.

According to propstream

Home is valued at 190k but I believe ARV could be around 250k and there is an existing mortgage of 141k. If you know about Detroit markets this is in the Boston Edison district.

My question is for those who wish to answer is am I working with somewhat of a deal and what questions should I ask next to move forward maybe jv so I can see the ropes?

[Carl Millsap]

@Paul Moorer you'll have to determine if it's a deal or not based on your criteria, the numbers, and your end goal. Questions I'd ask / next steps:

Ask the owner:

1.  What repairs was your contractor working on? Why were you having it fixed / repaired? This will help you understand if it was an issue or if they were simply upgrading to sell. 

2. What do you think it'll cost to finish what they started? This gives you a ball park figure to back into your offer price.

3. When was the roof, HVAC, Hot water heater, windows replaced? These are capital intensive expenditures. If they haven't been replaced in the last 5-10 years then factor the replacement into your cost.

4. Why are you selling? You want to uncover why they're selling if you can. 

Based on their response to the above it'll give you more question but these usually get the ball rolling. Also check (search) the files of BP there are question worksheets wholesale /flippers use when talking to owners.

Once you have the above information ask the owner if you can do a walk through (if the place is vacant) to look at it and gather more information. 

When you walk the property take a contractor with you to look at the work that was done, what still needs to be done, and get an estimate of repairs. 

Once you have the repair estimate, get a pre-approval for what your bottomline number is and then negotiate with the owner. 

It comes down to your purpose and numbers. Are you buying to live in it? Use as a rental? Wholesale? Flip?

Confirm your ARV / adjust for current environment / risk and don't get emotionally tied to buying the house. Sometimes the most powerful thing you can do is make an offer and walk if the numbers don't work.

Good luck