Hello,
Got myself in a deal and I want to brainstorm all my options.
I recently picked up a nice 4 br, 3 ba 3,200 SF home from a sheriff sale for $161,000. Based on the research I had done, it appeared to be some sort of flip gone wrong- was picked up 3 years ago for 100k, on the market this summer for 250k, then didn't sell and went to foreclosure. The plantiff was a Hard Money lender and the defendant an LLC.
There were no photos of the inside of the home on the internet, but I did a walk-by before the auction and could notice plenty of enhancements- new paint exterior, new windows, new AC compressors out in the back lawn, some electrical conduit ran, nice light fixtures and swimming pull furniture, etc. Note that I could tell a family is living here - small dog barking, kids toys and floats by the pool, truck in the driveway.
The problem I did notice was that the taxes on the property were much higher than expected - 12k/year.
I also have reason to believe the people in the house own it in some sort of capacity and aren't renters.
So, here are my assumptions
1.) House needs minimal repairs or renovations. Say its 5k for some minor repairs and painting
2.) House is currently occupied by family. House was foreclosed to pay off the hard money lender
3.) House may not move fast on the market due to the high taxes. Another caveat is the Town gave tax abatements to new construction homes (no taxes for them) in order to stimulate some growth to the area. So, to a buyer, the new homes may be more appealing, reducing the appeal to my house.
Therefore, option A is:
A.) Evict the people in the home and put on the market at reduced price. Plan would be
(225k (sale) - 161k (purchase) - 5k (repairs) - 5k (taxes/fees/liens) - 13k (realtor fee) - 10k (closing costs) = $31k profit before taxes.
Is there anything more savy I could do? I was thinking about approaching the family in there with an Owner financing deal, and offering the home to them for 250k with an 80k deposit down. This would potential increase my sale price by 25k and 33k of costs. However, probably is a long shot that the people would have 80k to spend and be interested in this sort of arrangement?
