All Forum Posts by: Jay Scott

Still working on it. I am letting the seller "figure some things out" for himself. He's one of those who has to feel like it was "his idea". So, I am playing to that. I expect to have it going in the next day or two.

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So, my first deal out of the gate after a 5 year hiatus from the biz is a funny one. Off market, direct with seller. House worth 3.6 MM. He owes 2.3 MM which includes 14 payments he's behind. No NOD yet. His credit is shot, and he is currently rebuilding his business that crashed last year. He is adamant about not selling, wants to do a cash out refi and pull out $600K. He's dreaming. He and his wife have been in the house 30 years, and are being sentimental. Short story, I structured a creative deal that would get him out of trouble with the bank, put some cash in his pocket, and he could stay for another 3-5 years while I make monthly cash flow and a chunk of cash up front. Here's the challenge. He and his wife are being emotional, which means he is keeps "getting in the way" of the deal. Here's the last, he thinks I should just put a second on the property, give him his $600K, then make money on the back end when he sells in 3-5 years.....Haha! I had to have an "expectations call" with him. It just serves as a good reminder that while dealing direct with the seller can provide tremendous opportunities, it also means playing counselor, advisor, advocate, and being blunt and real with them.

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Quote from @Caleb Brown:

Happy to chat on KC. Similar to some of the areas mentioned above, strong market for flips or BRRRs

Hi Caleb, that would be great. KCMO was one of my markets back in the day.

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Quote from @Brandon Ribeiro:

Welcome back to the game! Love the game plan—starting with light-to-moderate rehabs is a great way to sharpen the systems before scaling into larger flips or multifamily.

In terms of markets, it really depends on your appetite for volume vs. margin, but a few that continue to show strong flip potential (based on spread and demand) include:

• Philadelphia – Diverse housing stock, solid buyer demand, and still plenty of value-add opportunities in the right zip codes.

• Baltimore – Affordable entry, high rent-to-price ratios, and strong spread potential—though it takes knowing the block-by-block nuances.

• Cleveland / Pittsburgh – Lower cost basis, less competition, and growing investor activity—good for out-of-state flips or BRRRR strategies.

• Parts of the Southeast (like Birmingham, Augusta, and Columbia SC) – Steady growth, investor-friendly markets, and favorable laws.

Since you’re buying cash and focused on spread, you’ve got great flexibility—so it really comes down to how hands-on you want to be and whether you’re staying local or going out of state.

I’ve been active in a few of these and can share contacts or thoughts if you’re exploring specific markets. Glad to see you diving back in!

Thanks Brandon, this is very helpful. I have primarily invested in the Midwest in the past, for several reasons. I am curious about the southeast, as you have mentioned...I will reach out within the next week.

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Quote from @William Whitley:

Good morning, Jay,

So the owner is 7 months behind on the mortgage, wants to sell the property, receiving $500,000 while still remaining in the property for 3 to 4 years?

While on paper this acquisition as you presented it would provide you $900,000 in equity, as you have indicated, that could either increase or decrease over the next few years.

Here are some things to consider: First, if they are behind 7 months, you would have to catch that up, which at $20,000 a month, that’s $140,000 before late fees. Second, if they already have fallen behind, how are they going to pay rent enough to cover the mortgage if you acquire the property? Even if they receive the $500,000 up front, in a little over 2 years, that money is exhausted if they use it to pay rent. Next, do they expect to receive $500,000 and stay rent free for 3 years, while someone else is paying the mortgage in a subto situation? That would not be reasonable.

It seems to me the seller is not in a good bargaining position, and they want a lot even though they are potentially on the verge of losing their home should it be foreclosed on. While I’m all about win - win scenarios, it seems like as presented, the only one who would win in this deal is the seller.

It seems to me that with the amount of money you would have to come up with $640,000 ($140,000 to catch up the mortgage plus additional for late fees and $500,000 assuming they receive it at the time of acquisition), you would be better off getting a new loan and leasing it to them, if you could even get a new loan in this situation. Even if the cash to buyer were paid if/when you resell, there’s still a lot of up front costs that you wouldn’t recoup for a few years.

I just see more costs for you than benefits, and it seems like a lot of risk to take on based on the information you have presented.

Thank you for your insight. Yup, I agree. The seller really only has 3 options. Either work with me to come up with something that benefits both, sell it....which would actually make the most sense for him, or lose it. They are very sentimental, which is why I am in the picture. I said he wanted $500K. I didn't say he would get it! Haha! I have actually devised a creative way of doing this that would work for the seller and myself. I am meeting with the seller tomorrow to present it. I already did an "expectation" call to prep him for what is coming and to "test the waters". He was receptive. We shall see! Thank you again! Your post helped!

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Fort Lauderdale, Florida

Quote from @Dan Deppen:

From the owner's perspective, if he has a failing business why on earth would he want a $20K/mo housing payment, and why would he want to pay 9.3% on $2.2M??? If that was me and I had that much equity I would just sell the property, and buy a $400-500K property with cash (since the credit is crap). Then rebuild the business, rebuild the credit, and then maybe pick up another McMansion later - possibly at lower prices depending on what the Florida market does. Or maybe I'm just a huge wuss and need to learn to live larger.....

Oh, I agree with you Dan. However, when dealing direct with homeowners in distress, there tends to be emotions involved. It makes no logical sense for them to stay in the house, especially since their kids are gone. They are in a huge house, just the two of them. But, they are sentimental about it. It happens a lot with these types of deals. You're right, if they were smart, they would sell and move on. At the same time, this also provides an opportunity for them and me, so.....

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Fort Lauderdale, Florida

Thank you for your feedback. After brainstorming with some colleagues, I have come up with a strategy. Just putting the numbers together, and will present to the owner tomorrow. I will let you all know how it goes!

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Fort Lauderdale, Florida

Hey all, I have the inside track on an off market deal in Southeast Florida. Here is the 411:

SFH. Owner Occupied. Owner and wife want to stay another 3-4 years. Adamant about that.

Loan Balance (Including 7 months of back payments) - Approxmately $2.2 MM

No NOD filed yet

ARV - $3.6 MM

Only minor updating needed

Wife went through some serious health issues for the past year, but is recovering. While that was happening, his business plummeted while he took care of her, but he is getting it back up and running.

Owner wants to cash out refi. Cannot do it due to credit score. Low 500's, and business took a big hit revenue wise

He would like $500K cash, but I could negotiate that. $500K would put the overall "all in" at approximately $2.7 MM.

I am thinking of putting together a Subject To type deal, but I am concerned about the Southeast Florida market over the next 3-4 years.

I have built strong rapport with the owners, and they would be open to something creative.

Current PITI is $20K per month at just over 9,375%.

Smaller local bank holds the mortgage.

Any ideas / feedback is welcome. Thanks!

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Fort Lauderdale, Florida

That is a good thought. He and his wife love the house, and is pretty adamant about staying there. After that, they are planning to downsize. Thanks!

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Thanks Dominic, you gave me some ideas to think about.

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All Forum Posts by: Jay Scott

Jay Scott has started 5 posts and replied 18 times.

Post: Dealing with Homeowners Has its Advantages....and Challenges

Post: Dealing with Homeowners Has its Advantages....and Challenges

Post: The Best Fix and Flip Markets Are?.....

Post: The Best Fix and Flip Markets Are?.....

Post: Feedback is greatly appreciated!

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Post: Interesting Deal. Feedback Welcome!

Post: Interesting Deal. Feedback Welcome!