All Forum Posts by: Gregg Gannett

@Khadijah Celestine I think this starts getting into how well a level of professionalism, trust, and ability to close is presented along with letting the buyer be apart of the negotiation. Know your ceiling offer before hand and don't ask for a pre-pay unless it is demanded or absolutely needed to close. If so, then try the old "3-2-1%" or $750/$500/$300 tier prepay fee structure based on the number of years left, again know the number spread. Listen to the owner, don't make it to complicated and remember to use "If I can...., would you be able..." it works in reverse too. 

-G  

Hi Khadijah,

Best to get with our attorney and title company from the onset. Not sure if you are using a broker. In general a Title can give certain rights to a property and the Deed can convey certain ownership per each state's statutes taking into consideration a debt structure and one's individual legal and tax status. Inspection, financing, due-diligence and the like are common contingencies normally included in standard P/S contracts. An attorney can advise on additional contingencies or Addendums per deal or property. A LOI is a non binding document at the end of the day.

As for the counter offer what is the leverage to be offering 40% less than asking price with 20% less down payment and 2 years less amortization for -50% interest profit that the owner would agree to such a hair cut? Yes it can't hurt to ask and if "no" then have option B and C ready. If the owner has a level of experience he/she is going to know "You can ask for price or terms, but not both."

Good luck,

G 

Hi Zipp,

You can put me on your list of upcoming deals. 

Thanks

G

@Ben C. Hi Ben, yes thanks should have reference 5% gross profit. Looking only at cash on cash to me for this deal is kinda like cherry picking ROI without some consideration to IRR when there is a total cost of capital involved for a whole year with no ability to generate any cash flow. That may be stretching a bit and yes one can say $200k in $48K return but again for me to selective a view for the total cost and risk with such a thin profit margin. At the end of the day it is only a 5% gross profit w/o surprise, -3% inflation, -taxes 15% (no SDIRA) for $39.5K and it has to sell.

Being a town home setting there is little room for forced appreciation to increase that spread and will need $5K in monthly rent if you become a landlord. There after if wanting to re-fi $720K is 80% LTV* and a bank appraisal can be more converservative so if it came in at $875K how do you get your money back until sold? Assuming the market continues as is or raises great, it helps correct any mistakes but that is not investing. Flipping is really speculation subsidized by a deeply discounted purchase or creative financing justified by the sale, with renting as the most likely plan B to break even monthly at the least.

Conversely, many here on BP take their $100-$150K all in and do 2-3 flips a year for a better return, better rental numbers if stuck and gain a free and clear asset to leverage for return of capital putting one in more of a drivers's seat than passenger seat.

As a very successful investor told me early on, "Deals are like buses, another one will come along."

Cheers,

G

@Ben C. Not enough detail to offer a thorough analysis. Personally, I wouldn't consider it or look to make it work as outlined simply for the fact a 5% price adjustment a year out wipes away any potential profit not to mention any possible concessions to close. Also, unknown as posted is the debt service structure, planned overages and delays typical of rehab hurdles. Even so, not a deal to me tying up $200k for a year in hopes of a 5.3% return even if able to pick up some rehab savings along the way to be on the hook for $700K with the meter running and a gun to your head to rent or sell. Don't forget inflation robs -3% ($6K) of the cash or the time value of money/lost cost opportunity on multiple deals for the same year of time. My 2C.

Many many others here on BP who can really drill down on this much better.  

Welcome Gregory to the BP community. If you haven't already, seek out your local REIA (Real Estate Investment Association) there in sultry Savannah, search here for local meet-up groups held around you and connect with other BP members from Savannah by reaching out to them.

Good luck

-G 

Good thread for a topic not greatly covered on the BP mainstream.  

So much to respond to and yes risk is every where in its native form. 

I have 8 years of experience in Merida, Yucaatan and happy to help anyone however I can with the issues mentioned for that area.  

PM if you like. 

-G

"Give them away" b/c you have plenty of  equity between the 11? Don't know the numbers but:

a 30 day listing agreement at your rock bottom to test the market or a reserve auction for the absolute bottom price - @charlesparrish deals in that world.

Needing to sell 4 in the same building is competing against yourself for consistent prices until free. One approach may not work to clear all four. 

-eBay Real Eatate

-JV with a local church -sell raffle tickets

-Habitat for Humanity

-Homes for Vets (NGO)

-Stop in the Aldermans office and tell them what you have. 

-Barter or post on Craigslist a swap. Remember the red paper clip swapped up to a house in one year story a few years ago

-BP Market place

-Connected Investors . com

-G

@Jay Hinrichs 

BRCK - Buy, Renovate, Cry, Karma

BRFF - Buy, Renovate, Foreclose, Forgive

PIG - Properties Inversely Growing 

-G

As said earlier it happens more than one thinks. Requesting/Writing a (VIF) "Verify in Field" on relevant work orders or during planing and any due diligence is a type of catch all for "Don't Assume". Also be keen to Habitable vs Useable sq ft. -G