All Forum Posts by: Marvin McTaw

I am looking for contractor recommendations for a higher end rehab I will be doing in the Atlanta metro area. The property is in country club and will need higher end finishes to help me sell the house fast. The primary things I need done are

• Updating two bathrooms (fixtures, flooring, paint, etc.)
• Updating closets
• Replace carpet
• Refinishing wood flooring
• Paint or update kitchen cabinets
• Re-sod yard 
• Sidewalk repair
• Other minor cosmetics

I have a motivated seller that is willing to sell on terms. Here are the quick numbers: 

• ARV = $600,000 to $625,000
• Repairs = $25,000
• Purchase Price: $500,000
• Mortgage Balance: $500,000
• PITI: $2,750/mo
• Annual HOA Fees: $2,350 + $1,500 initiation fee
• Market Rent: $2,700 to $3,000

Repair Details

• Update master bathrooms, update kitchen cabinets, re-sod front yard, other minor cosmetics

The owner has told me that he is willing to sell it on terms. The purchase price is the mortgage balance and he will let my payments basically be the same as the mortgage payments. Unfortunately he will be ~$10,000 behind in mortgage payments next month. He told me he doesn't care about his credit anymore and that in the worst case scenario, he would do a deed in lieu of foreclosure. 

I would like to tie this property up as quickly as possible but want to do it the right way where I am protected and have as many exit options as possible. I thinking buy this under contract for deed, fixing it and then selling it. If I can't sell it, then sell on owner finance as he's willing to give me 24 months. The more I think about it though, buying it Subject To has merits as well as just doing a lease option.

The other thing I should note is that I am also concerned about expenses because I would be covering closing costs. If I have to close on the front end and back end that's probably going to be $40,000 in closing costs total which is why I'm considering doing a lease option instead and simply executing it that way. 

Anyone have suggestions on the best way to make this work?

Welcome to Bigger Pockets @William Jurney. Are you still doing contracting work as well? If so, please give me a call as I have a minor rehab job (bathrooms update, kitchen update, exterior landscaping) and am looking for a general contractor to take this on for me. Please give me a call (see number below). 

Welcome to bigger pockets @Lawrence Dean! Feel free to message me if you'd like to network with another investor in the area. 

I use Shafritz & Dean. Talk to Matt Schuurman. His email is [email protected]

Edit: 33% not 30%

Hey @Lawrence Monyei it's up to you really. Pay them as much or as little as you think works in your business. I try to pay people as much as possible so that they bring me more deals. I personally would be willing to pay up to 20% with a minimum of $1,000, even if I only made $3,000 on it (which I realize is 30%). If it's a property I'm going to rehab, I would give them the fee upon purchase plus list the property back with them so they can make even more money.  

The short answer is it doesn't matter. Get it under contract whatever way works better for you and the seller. I would prefer a P&S agreement over an option agreement mostly because it's a stronger document with more spelled out rights and obligations. The way I think of it is like this: both the agreements are effectively option agreements.

Under a Purchase & Sale agreement you basically pay some money now (i.e. earnest money) to have the right to purchase the property later down the line. You can get out of it for a wide variety of reasons (e.g. inspection, title issues, financing, etc.). With a standard option or flexible option agreement you pay some money now (i.e. the option fee) in order to convert to a purchase agreement down the road to ultimately buy it. Said differently, your standard option agreement is usually an "option on an option" or a double option. I typically use option agreements when I just want to get an equitable interest in the property to see if I can sell it.  

In any scenario, don't wait. Go ahead and get it under contract in whatever form works best for you and the Seller. 

Hey @Levi K. first you need to buy the list and then use a mail service. I've purchased Absentee Owner lists from Listsource and Listability and then done mail fulfillment through Click2Mail. If you're looking for an all-in-one solution you can also just go to https://www.yellowletters.com and tell them you want to buy an absentee owners list. The support team there has always been super helpful and responsive. I hope it helps.  

TL, DR: How do I make money on a deal where I can't figure out the after repair value (ARV) on a property? Need suggestions on how to value it.  

I am working with an individual seller who is willing to sell his doublewide mobile home, 40 x 40 commercial building and 3.5 acres of land to me. They are flexible on price. The one problem is this: I have no idea how to actually value the land and property. 

The tax assessor's market value for the property and land is $87,300, split between $18,300 for the land and $69,000 for the improvements. Some automated services I use to value the property value it between $112,000 and $130,000. I have seen one house (not mobile home) within a quarter mile (1/4) radius in the last six months sell for up to $300,000 but most of them are around $150,000. 

The owners are asking $80,000. I have no idea if this is a fair or overpriced because I'm not entirely sure what the back end after repair value is. The only thing I can think of doing here is to enter into a contract for deed for as low a price as possible (e.g. $50,000) for as long as possible. While in the contract for deed, I would list the property to sell it. Once again though, the problem is I don't know how to determine an after repair value which is how I would back into what I can pay them. 

Any suggestion you might have on valuing or approaching this situation would be greatly appreciated!

Additional keywords: valuation, purchase land, lots, atlanta, seller financing, land contract, wholesale