All Forum Posts by: Jon Acosta

@Wayne Brooks & @Brian Gibbons,

THANK YOU! I thought that was the case, but couldn't get a straight answer from searching.

To clarify: Since I'm attempting to purchase this home from the Seller, and not HUD directly, then I'm clear to at least explore the possibilities of creative financing for this home. 

I'll gather more information regarding the low equity and details of the situation.
But this is a great start.

Hi BP,

Quick question that I can't seem to get a straight answer on:

I have a VERY motivated seller who needs to sell their home, like, yesterday.

The only potential red flag I see is they purchased the home from HUD in 2007.
Payments and taxes are all up to speed, but they only have about $20k in equity.

Is this a deal worth exploring as a "Subject To" purchase?
Or should I steer clear from this sort of scenario? I'm a bit foggy on the rules around HUD home purchases and creative financing.

Any advice would be greatly appreciated!
I really want to help this seller out, but not sure if it's even possible.  

Over the last few days, I've been vetting my first potentially solid SFH-For Sale By Owner Wholesale deal.

The seller was an older gentlemen. 
From our first phone conversation we hit it off 100%. 
I expressed some interest in the property and after a few hours of thinking it over and running some numbers, I finally swung by to meet him and see the place.

THE PROBLEM:

Then I met her... The seller's wife. (aka- the "rulemaker", as expected.) 
But the one little twist that I DIDN'T see coming... was that she's also an ex-broker. 
So right off the bat (from the moment I walked in and met her) I knew I was doomed.

Long story short:
The male seller and myself had a great conversation. He showed me the whole house, told me all the updates he had been making to sell it.

We got to the kitchen, and I began speaking with his wife; listing to their intricate and incredible story of being landlords, traveling, and enjoying the good life.

Everything was going beautifully. 

THE WHOLESALE PITCH:

Then came the "alright, so here's what I'd like to do..." conversation. 

My proposition was to tie up the property under contract for 30 days with an agreed price that they were asking, market the property to find a buyer that would pay a little more, assign my interest to that buyer, and everyone would walk away happy.

(of course, I stated this much more eloquently... but you get the idea.)

The male seller was happy to hear it!

His wife (ex-broker) hated it. And said she would need to review the contract in-depth, think it over, etc, etc. 

Respectable answer. 
I told them I'd come back tomorrow with my contract and we could review it. 
(footnote: they don't believe in email. so it wasn't an option.)

THE SOLUTION:

After spending the evening thinking it over, I figured I could offer a less "daunting" offer by presenting an "Option to Purchase" contract instead of a blatant "Purchase and Sale agreement with assignment clause", which would leave them locked in with me for 30 days.

The difference in these two contracts (from my understanding), is that an "Option to purchase" contract would allow the seller to still sell the property to whomever they wanted, while I would also simultaneously be able to market the home at 0 cost to them for 30 days.

If a buyer approached them with an offer that was higher than the one in my option contract, they would give me the opportunity to "match the offer", or I could simply walk away from the deal and they could go with the higher price.

THE FAIL: 

As I was fighting traffic demons to get to their property by 3PM, I gave them a call to let the seller know I'll be there soon. But this time, the wife picked up.

I mentioned that when I got there we could review the contract and that my intention is no longer to offer a Purchase and Sale agreement, but rather an "Option to Purchase", which would represent my equitable interest in the home for 30 days, but wouldn't stop them from taking any offers.

She told me, "No, we won't do that."

I politely stated, "I absolutely respect that decision. No hard feelings. Just out of curiosity... why won't you consider that as an option? Just for my own clarification."

She told me that "we just want to go with a real estate agent that we are friends with instead and are happy to sell it that way for the next 6 months."

I was    |-----|   <---- THAT CLOSE! to locking in my first deal.
And then a HARD NO.

SUMMARY OF WHAT I LEARNED:
This was NOT a motivated seller.
So "options" or "sales contracts" were out of the question

I think that was it in a nutshell. 

What I still can't understand is:
Was the wife being an ex-broker a factor in this equation?
Because from the moment I walked in, I could tell she had already written me off. 

It wasn't until I built rapport with her that I actually thought there would be a deal. 

QUESTIONS:

- Was the "Option contract" a good move on my part?

- Anyone have tips on how I could've better positioned the idea of an option agreement to the seller's wife?

In closing... I'm still learning how to justify these "no" answers after putting so much thought and time into a deal. 
So please, BiggerPockets, UNLEASH YOUR WRATH OF BRUTAL FEEDBACK!

@Andrew Cordle, thank you for putting this together. I'll be there!

@Wendell De Guzman' advice- $125,000 installment with 10% down)

2) Offered him $75,000 cash to sell me the home outright.

I'll keep everyone posted on how this turns out. 

Thanks so much for the help!

@Nathan Fox - Tip for the "@ mention": Type someone's first name in, and then be patient. BP's database seems to be a little laggy at times.

As for your friend's condo situation; Yikes! Talk about an emotional disaster.

I can kind of relate to the "condo death travesty". 
When I bought my unit at that complex in '08, the girl who owned it had been hit by a car while jogging.

So at the closing, I had to meet her teary eyed emotional parents as they signed the place over to me. 

Very awkward moment.

But regardless of the parent's motivated need to sell this memory of a condo... here's how I know I knew nothing: I STILL OVERPAID! 

There was minimal negotiating. It was a straight up "retail sale", despite the disastrous motivation. And looking back, I can't really blame anyone but myself.

But I digress...

Great meeting you, Nathan. Looking forward to connecting.

-Jon

As always, excellent advice @Brian Gibbons.

Factoring "imputed interest" into the equation, couldn't installment plans also be considered"seller financing"?

As for the down payment; I'm assuming we would negotiate something substantial enough for him to make his move to Dallas (like 10%-20%).

Final question: if he's carrying the note (I.e. Playing the role of "bank"), I'm assuming I could still lease option the home out with minimal concern of a "due on sale" clause to be called...  Right?

Correct me if I'm wrong, but the solution to all these questions is probably "my terms". 

:)

@Jesse Waters oh man... best of luck with the condo.
Honestly, they screwed me even after I successfully sold the property. 

QUICK TIP: If you ever decide to stop paying the mortgage/ default on the property, DO NOT stop paying the HOA fee until you are no longer legally responsible for it.

I stopped paying them once I realized I was going to short sale my place (because fees were $550 alone). 
 
But HOA debt is like Student Loans- IT DOES NOT GO AWAY.
Even after bankruptcy, they can still come after you.

Also, try speaking directly to the HOA president or someone on the board. If they have any emotion in them, they might be able to help you out.

@Anna Ryder, You're in Smyrna! That's a target market for me. Would love to chat sometime.
In my opinion, the new Braves stadium in Smyrna will be a game changer for the direction of growth in metropolitan Atlanta. 

@Linval T., @Dmitriy Fomichenko, and everyone else: Thank you! Looking forward to getting to know everyone. 

I hit the ground running early late last week and found a FSBO motivated seller that's moving to Dallas, TX but needs to sell his vacant home before he can move.

THE FACTS:
- Home is owned free and clear 
- 3 bed/ 2.5 bath / 2 story home

- In a great "middle-class" family neighborhood.
- Currently vacant.
- Built in 1987 
- No repairs needed (so he says. haven't walked through property yet though. We need to agree on sales strategy first)
- Checked out the records: No liens, property taxes all paid, seller is the real owner.

- He's asking $130,000 as lowest price for the home

- Home appraised for $117,000 in 2014 according to records

- Current comps show right around $120,000 in his area

- (Sidenote: Seller paid $70,000 for the home back in 2010)

I approached him asking if he would consider a lease purchase. 
He said he would be interested, and asked what I had in mind.

So, I proposed a lease option assignment for his asking price of $130,000. I even agreed to split the assignment fee 50% with him ($2,250 each), and told him that I would also go as far as making a professional video to get the property occupied and good to go within 30 days.

After seeing he wouldn't get much cash up front, the seller said he "really needs to SELL IT so he can buy a new place in Dallas using the cash".

I see PLENTY of potential here. But this is my first deal... so I'm looking for advice.

MY GOAL:
To cash out with an assignment fee
OR
Buy low with an undecided investment partner for cashflow or wholesale split.

MY 3 NEW OPTIONS FOR THE SELLER:
Here's what i'm thinking I will offer him next:

"Okay, Mr. Seller, you need cash to buy a new home in Dallas.
Totally understandable. How about this..."

Option 1- Introduce seller financing to him and offer $115,000 with 10% down.
Find a buyer for him, and assign my contract.

Option 2- Seller finance offering $100,000 with 20% down.
Find a buyer for him, assign my contract.

Option 3- Pay $90,000 cash for the property. (then wholesale the home to a buyer/investor or seller finance it myself with a partner)

IMPORTANT NOTE: 
At this time, I do not know where the cash will come from to purchase the home, but I know I can find that easily.

My biggest struggle right now is creating a deal that makes sense for everyone in the transaction.

Any creative ideas, tips, or flawed logic behind my idea is more than welcome.
(@brian gibbons, I've taken a lot of what I've learned from your threads. Would especially love your insight!)

Hi Everyone,

Full Disclosure: 
I've been lurking in the shadows of the forums and digesting EVERY single episode of the podcast like audio crack for weeks now.
This is me officially stepping out to say "hello".

My name's Jon; I live in Atlanta, GA and my "profession" is in video production and A/V technologies. 

First, I just need to say that Biggerpockets.com has downright shifted my entire understanding of what real wealth is and how SIMPLE (not easy, but simple.) it can be.

IN SUMMARY:
You just have to know how to play the game.
And it's HELLA fun!

Quick Backstory:
I had a terrible experience with a condo back in 2008 and have been absolutely terrified of any concept of home ownership ever since. (btw- @Joshua Dorkin, I 100% agree with your views on HOA's)

This community has given me the confidence I didn't even know was missing; to start building REAL WEALTH in a way I didn't even know was possible. 

And frankly, that's just downright sexy.

Looking forward to connecting with everyone!
Happy Investing,

-Jon