All Forum Posts by: John Franczyk

As it turns out, the seller (or more likely, the seller's realtor) is looking for a fish to fry in this deal. Based on my inspection yesterday, the property would have needed at least $40K - $50K in rehab and upgrades even before the flood (new roof, new windows, etc.). The realtor claimed that the ARV would be at least $130K, and that the seller already had a written offer with two more on the way. I told the realtor that I'm not getting into a bidding war, and that $20K would be my absolute highest offer right now. Doing no deal is better than doing a bad deal.

I contacted the heir of an estate in southern Wisconsin last Fall. He lives out-of-state (roughly 700 miles away), and his father passed away in April, leaving him a 3BR 2BA house here. He opted to try to sell it himself at retail. In December, he listed it with a realtor for $99,900. I wished him luck, and there's no problem so far.

This being southern Wisconsin, the big freeze came in December, two weeks after he listed it, and the pipes burst. Insurance handled the cleanup, but not the rebuild. Given that it was vacant, I don't believe that there are any other insurance proceeds for reconstruction. It's down to the studs, and at a minimum needs a new kitchen and bath, floors, and walls. The water supposedly did not damage the furnace or water heater, but that remains to be seen. The heir called me and said that now he is very motivated to sell and he wants to know what I would pay. I'm scheduled to look at it later today to get a better idea of everything it needs. The house remains listed at $99,900. Real ARV is probably closer to $90K. The heir knows he won't get anything close to that.

I have a slight mold concern, but given that the damage happened in cold weather, the risk of mold infestation is low. He got the cleanup done very quickly also, so mold had little time to grow.

From what I know of the place so far, I could probably get it into sellable shape for less than $25K. I want to make at least 10K, preferably $15K to $20K. I'm thinking of an open offer of $35K, with an upper limit of $40K. 

Any suggestions of how to approach him here? Are my numbers too high? What risks might I be missing with winter water damage?

Thanks for any thoughts or feedback.

Six Rental Doors

I have a lead on a single family property in suburban Milwaukee. The house is in an estate and the lender filed a foreclosure action against the estate. It's going to a sheriff's sale in January. I reached out to the estate and the lender contacted me, but gave me little information other than the fact that they got a default judgment on the foreclosure claim for a little more than $170,000. Here's the wrinkle that I later discovered -- the now-deceased owner was murdered in the house by her adult son, who suffered from severe psychological problems. 

It's not my intention to be callous about this event, nor to belittle the problems of individuals who suffer from mental illnesses. Nonetheless, I would like to approach the bank with a lowball offer with an argument that if the property goes into the bank's REO portfolio, it will sit there for a long time because, statistically, fewer buyers will be willing to consider purchasing a murder house. The house itself was a crime scene. I believe that it is no longer sealed up, but there is a cleanup issue that the bank or the new owners will need to deal with.

Any thoughts or advice on how to approach the bank with this argument will be appreciated.  Thanks!

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I've developed a business around contacting representatives of recently-filed estates and offering to purchase the decedent's house out of the estate.   My business model involves purchasing the property as is on an all-cash basis.  The representative doesn't have to do anything to the house - no clean-up, maintenance, etc.   

My first overture to the representatives is a targeted introductory letter, expressing a potential intent to purchase the house and asking the representatives to call me back.  The letters are typically mailed within the first week after the estate case is opened.  I follow up with general postcard mailings roughly every 6 to 8 weeks after the initial letter and after each successive mailing.  I've had some success with this approach, but I'm looking to increase my response rate.  Does anyone have any suggestions (e.g. magic words to include in the introductory letter, etc.) to increase the rate?  How best to approach an estate representative?

Thanks for any suggestions