All Forum Posts by: Tom Townsend

The referral came from a past client, not an agent.  We had to explain the terms to the client.  The purchase strategy that we came up with was provided after we met with the client and learned what their goals were.  Their #1 desire was to not take the house to market.  The house was in no way show ready (it was a hoarder house).  The handful of cash investors we did show the property to, were well below their desired 185K selling price goal.  Only after that did we sit down with them and discuss the options and terms we ultimately settled on.   The "friend" that they pulled in was their financial advisor.  After explaining the structure to him, he understood but still had his concerns.  He felt they should sell to one of the institutional buyers (open door) even though they were offering less. 

We have a compliance manager on our team that ensures we have everything in order. I would have to go back and look at the contracts and addendums we had.  We did file a promissory note for the owner's financing.  I would have to look back on the terms of the note as Georgia has specific laws on min terms and length.  

Hope that helps. 

I agree with most all that replied.  Per our research the best markets to find deals under 100K are in cities with minimal population growth.  We have found most of those in the Midwest or Northeast.   Detroit, Milwaukee are two larger markets we researched and found some flip opportunities under $100K.  There are a lot of smaller cities in the Midwest that have similar opportunities.  Not a lot of buy and hold opportunities, most all flips at the current time (unless the market supports short term rentals). 

absolutely yet.  Inflation protected assets are really nice to have.  Keeping our eye on all indicators and being smart with leverage. 

Investment Info:

Single-family residence other investment.

Purchase price: $185,000
Cash invested: $29,900

Subject to + Owner Finance FIX and FLIP.

What made you interested in investing in this type of deal?

Great area with high demand for SFR. Appreciation is strong.

How did you find this deal and how did you negotiate it?

We are agents and this was referred to us from someone in our database.

How did you finance this deal?

We bought subject to the existing loan with a balance of $73,000 at a rate of 3.25, 30 year fixed. The owner was willing to owner finance an additional $70,000 at an interest only rate of 7% annual, we negotiated a 6% commission and $1,500 toward closing on the deal as well. We paid the balance in cash. 

How did you add value to the deal?

It was important to the seller to sell for $185,000. We explained that we could do that, as long as they were open to talking about the terms, which they were. We negotiated the subject to, plus owner financing, sales commission, and contribution to closing costs by explaining that by structuring it this way, our costs were lower which in turn allowed us to meet their goal of selling for $185K, and netting them more money.

What was the outcome?

Closed and flipping to an institutional buyer after minor clean-up only and a holding period of 2 months for $240,000.  Net income on deal is 66K (11K in commission on purchase and 55K at sale) for 2 month holding period and total cash layout of $31K.

Lessons learned? Challenges?

After we were under contract, the sellers reviewed with a friend that was "helping" with finances. The friend raised a number of red flags in which took some time for us all to come together and explain to the friend how it all works, that what we are doing is legal and ends up helping the seller. Always ask "Is there anemone else that will, or needs to be, involved with this decision?"

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We are agents and appraisers.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $315,000
Sale price: $375,000

We assigned a contract to another institutional investor looking for long term holds.

What made you interested in investing in this type of deal?

Growing area with high demand for rental and other SFR homes. The home needed work and seller was not wanting to invest any money into repairs, and did not want to have the home shown on the open market.

How did you find this deal and how did you negotiate it?

As agents we have a large sphere and this opportunity came to us through another client of ours.

How did you finance this deal?

We Wholesale it so no cash ws needed from us. We were originally planning to finance as a long term hold investment property with 20% down.

How did you add value to the deal?

It was a win -win - win for all parties. The client wanted an easy solution to selling a property that needed some repairs. She did not want anyone visiting the property, and she wanted to work with someone that was referred to her, not a "stranger" or large company. The investor was happy to have another property in their portfolio, and we put it all together for an assignment fee plus commission on the sale.

What was the outcome?

Property sold within 3 weeks, we negotiated a 30 day temp occupancy so the seller had plenty of time to move into a new home that we sold her.

Lessons learned? Challenges?

Institutional buyers are willing to buy homes that do not cash flow in our market. They are willing to pay a higher price for the long game of appreciation.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We are agents and appraisers.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $154,700
Sale price: $171,600

Wholesale after deciding not to hold.

What made you interested in investing in this type of deal?

Great area, perfect rental home in an area with high demand.

How did you find this deal and how did you negotiate it?

We have years of working with probate properties and estates. We met with the executor to the estate and had a conversation about what they were wanting to do with the property and what was the most important. The family wanted an quick and easy solution, they did not have the time or money to put into the property. We wrote up an offer that was fair and a win-win for all with the intention of holding to property.

How did you finance this deal?

We ended up assigning to another investor they could flip after we found that the HOA has some restrictions on rentals.

How did you add value to the deal?

We provided a quick and easy solution to the family members that were from out of town, and did not have the time or money to invest into renovating and selling the property on their own.

What was the outcome?

We closed on the property in two weeks. Everyone got what they wanted in a timeframe that was desirable to all.

Lessons learned? Challenges?

Once I determined that it was not a good cash flowing hold property, and has rental restrictions in the neighborhood, I should have bought and flipped myself versus wholesaling. The investor we assigned to, sold for 25K more than I thought they would have been able to sell for.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm an agent and appraiser.