All Forum Posts by: Sean Price

@Bill Gulley

 Thank you for your input.  Coming from my back ground as a physician, it is important to me that all parties are treated fairly, openly, and the deal is a win win for all.  I like the idea of transactional funding.  My question is this, if I do have the transactional funding, but then end up unable to find an end buyer, how does that translate into actionable steps.  At this point right now, I do not have the cash to close as the end buyer.

I intend after a few wholesale deals to have the cash to be the end buyer, but starting out, how would you suggest that I proceed, especially considering the laws in Florida.

Thank you both for your time!

@Karl Krentzel this is why I love this forum, new concepts come to light that I had no idea even existed. Is transactional funding provided through banks, hard money lenders, transactional lenders?  I guess this is funding that is very short term...ie for the transaction on the duel close....and a fee is charged. Where do I begin to look for this type of funding? I feel like this would make the wholesale process very clean. 

@john Homer ....I am a little unsure about the  process in a double close....do I actually have to have the funds for purchasing and closing costs in order to do the first close?

@Karl Krentzel thanks for all of the additional input.  Now I am a licensed realtor, but should be ok with these procedures since I am acting as a principle in the deal.  I will of course provide full disclosure. 

I like the idea of having more of a commitment for the buyer. Great input...thank you. 

Thank you both.

Sean

Ok, so I am ready to pull the trigger wholesaling. Here is what I feel to be the step by step process.  Please let me know if I am forgetting something:

1.  Marketing for motivated sellers

2.  Communicate with leads. 

3. Determine maximum offer.  (70% arv minus repairs minus my wholesale fee)

4.  Make offer, if agreeable get assignment contract. (Anyone have a good example of an assignment contract) with contingencies based on financing. (Any other contingencies?)

5. Use bigger pockets calculators to make evaluation sheets for buyers. 

6. Find buyer, get earnest deposit.  Place in escrow. 

7.  When buyer and seller close, I get my fee. 

I am a little unclear as to how the process works with escrow and closings so any clarification on those details would be appreciated. 

Thank you in advance. 

Sean

Thank you. Sounds like good advice

Thanks for the feedback.....and I agree with not banking on any appreciation.

So I guess my next question is this.....from the owners perspective, is this how an investor owner would structure a lease option with a buyer? With the future sales price as the agreed sales price or would the buyer and seller typically agree to a price that is more congruent with the current market value?

I am currently living in a home with my family. Brief history I have a past bankruptcy and some financial credit challenges that need a little time to over come so we are looking to lease option the house we are in for a two year lease option.

The current owner is asking for $460k as the sales price with $25k down. The current value sits between $400-$420k at the high end. So basically the owner is looking at major appreciation to occur for me to be able to get the house to appraise in 2 years at the 460k.

He is not willing to negotiate on the price, or on the closing sales price, even if the house does not appraise for the full amount. I would have to come up with the additional money to cover the shortage or lose my $25k deposit.

Is this typical of a lease option? I understand that I need to pay full retail for the property since I am having to option to get my credit issues handled....but is it a safe bet to assume that much appreciation will occur in 24 months?

Thank you,

Sean

The analysis is impressive. My concern is with the age of the house are you able to rehab and sell the house even if the wiring is not up to code or if you have any lead paint issues? I know that here in my market both of those factors would have to be addressed to get the house up to code and to make the property insurable. I would look into these factors before you purchase because that could add a big chunk to your rehab costs if those need to be handled.

Other than that, I also agree with the worst case scenario of going with the low end ARV of $176k and making sure that the numbers still work for you. I personally am very conservative and cautious and try to work with worse case scenarios before deciding on a property.

If you end up hanging onto the house because it wont sell and are collecting rent, how will that rent end up cash flowing for you when you consider your private lending sources for the funding? Would you end up going with traditional financing to have the property end up cashflowing?

If all of these numbers work out in worst case scenarios then I say go for it!