All Forum Posts by: Dave Hall

 Hey Chris,

I read the whole post. Learned a lot. Thanks!

The house I'm looking at is quite a bit smaller but looks about the same - cobwebs, piles and piles of junk. I couldn't see the whole house because most of it was blocked off by walls of garbage. I should have taken pictures but I just met the owner and I didn't want to spook him. I'll see if I can get pictures tomorrow.

 Hey Gordon,

You are absolutely right. I went by there about an hour ago and was blown away by how disgusting the place was. Structurally the house looks sound, but there is a lot of work to be done and the owner is a hoarder. The place was a mess, piled high with urine soaked trash, cobwebs everywhere. The neighborhood is great and the houses on either side are nice. It's just his place. He just hasn't tried to do anything with it at all. 

My contractor will give me some better numbers in the next day or so, but I would guess closer to $60,000. That's why the original offer he got was so low - $65,000. I still think there is plenty of room to make money on this.

I gave the owner until Saturday at 2pm to think over my cash or terms offers. If he accepts, I'll put it under contract and check the house out more thoroughly. I just don't know if my contractor is going to be able to assess the property solely because he won't be able to access anything. I'ver personally never been in house that cluttered. I've seen them on tv but this was really ridiculous.

 Great idea Travis. I've already begun looking for a rental in the area that he wants to live in. If I get private money for the deal, maybe I can get enough to cover the rental. The guy in the house is actually the owner and not a tenant, but it can essentially work the same way. He inherited this property and really has no money except for what he can get out of this deal.

Thanks Brian,

That's a great approach. I need to make sure my rehab estimate is correct, but even if I'm off quite a bit, it looks like I can still structure a joint venture like this and he'll still get more money. I love the idea of giving the seller more and not just shafting him with a low ball offer. 

 Hey Chase,

The other investor will likely get the deal if I can't somehow sweeten it for the owner. 

Thanks for the advice on lending. It would help to get that squared away.

 Hey Chris,

Thanks for the advice.

I could be way off on the reno estimates. I'm using $25/sf on 1300 sf.

I'd like to rent if I could but a flip will work as well. I want to make sure the owner has a place to stay or the deal won't work.

Your last strategy is a good one. I'll ask him how much cash he thinks he'll need to get into a new place. I've already started calling around to see if I can find him a place.

@Justin Fernandez,

That's a good question. I'll need to get my contractor in there to make sure that the house is reparable. If it is, 2 months (on the outside) wouldn't be out of the question.

Hello friends,

Please see the investment summary at the bottom of this long post.

I just got off the phone with an owner who NEEDS to sell no later than December to avoid paying taxes. He has no income and has just inherited the house from a relative who recently passed away. So the owner is mourning right now so I need to be sensitive to that. I have an appointment to walk the house at 1:30 PST.

My real estate agent did a market analysis and says that the property is worth around $190,000 in market ready condition, which this property definitely is not. There are no mortgages or encumbrances on the house. He owns it free and clear.

The house was built in 1914. The plumbing is pretty much busted. The owner is getting water from the neighbor's hose. The water heater will need to be replaced.

The owner tells me that the house is otherwise structurally sound with no cracks in the foundation. Of course, I'll ask my contractor to go in and check all of that out.

The next door neighbor is an investor who owns a lot of property and has already offered the owner $65,000 and has told the owner that he will help him with a new place to rent, something which he desperately needs. Since this investor has other properties, it seems to be within his power to offer. Maybe you guys have some idea of how he is going to do this.

I asked the owner if money was no object, how much does he want for the property. He said $75,000. I also asked him what he would like and he would like to be able to get a place of his own with some room for his dog to run in.

I estimate that it will cost somewhere in the neighborhood of $30,000 to get this place market ready, if not a bit more. I'd like to add a second bath if I could.

I told him that I would give him both cash and term offers today after walking the house. 

So here's my question:

What terms can I offer him that will give him cash and some cash flow to pay rent or buy another place where he and his dog (Jedi) can have a good life. His dog is named "Jedi" and I told him I'd throw in free tickets to the star wars movie in November if we do the deal. He laughed. He liked that a lot.

Acquisition Options:

1. All cash - $75,000 and help him get a place. I'll need a cash buyer since I won't have the cash.

2. Lease option sandwich - Give him a cash flow for 3 years, enough for a new place, and cash in 3 years. I'll need a partner, private or hard money to invest in the repairs.

3. 100% Seller financing. I'll need a partner, private or hard money to invest in the repairs.

4. YOUR IDEA :)

5. YOUR IDEA 

6. ...

Deal Summary

• $190,000 ARV
• Free and Clear
• $30,000+ Repair Costs
• Owner wants at least $75,000.
• Owner needs money (he has no job) for a new place
• Owner wants room for his dog

Thank you all for your help!

Dave

 Hey Zack,

Thanks for your service. If you do come to Chico State, drop by and say hi. I teach there in the Tehama Bldg - mostly. :)

Thanks for the warm welcome Jessica. I'm learning all I can about the market. I've been here for quite a while now, but as you know, putting on your investor glasses changes things. I appreciate the pointers. :)

Dave