I got a call this morning on my cell phone from a guy who said he saw my bandit sign. I was a nervous wreck at the beginning of the call, but settled down and was rather proud of how I handled the call in the end. He said he just wants out of his property, and is not looking to make a profit at all ... yip-ee! I asked him why he wanted to get rid of it, but he wouldn't give me a definate reason, only to say he didn't want to continue paying for the house. He said he is up to date on his payments, insurance, taxes, etc., and would gladly just sign over the lein to the property. Here are the financials I got from him:
House: 1997, ~1100sf, 3/2
Owes: $86,000
ARV: ???
Repairs: Very minor (missing tile in bathroom, bowed board in back siding). New A/C unit and W/H (two years ago).
He said he believes the house is worth $110k-$115k, but doesn't have the time nor inclination to list with a RE agent, which had me a bit suspicious. I was at work and I told him I would run some numbers and give him a call this evening. I told him if by chance it didn't work for me would he have a problem if I assigned the deal to someone else, and he said "Not at all."
I'm excited about the lead, but I need to do my due diligence on this one. He said there are no other leins on the house besides the mortgage, and he just doesn't want to pay the mortgage anymore. I'm a little suspicious because he claims there are no other leins, he's not behind on anything, has a fair amount of equity (according to him), and just wants out with no profit. I know the area very well, and it isn't a hot area at all, so I understand him saying the house would probably sit a while if it were on the market (at full price).
Subscribe to:
Post Comments (Atom)
5 comments:
Okay, this isn't sounding too good after all. I ran some preliminary comps on the property and found the avg $/sf is about $79 (which even seems high to me). Also, tax records show the house is only 1009sf. Therefore,
$79.01/sf x 1,009sf = $79,717
IOW, his $110k-$115k appraisal estimate is WAY TOO HIGH. If anything it appears he's upside-down on this property, which could explain his wanting to "get out with no profit", because there ISN'T any. :-/
I'll do some more digging, but I doubt anything I find will bring the value up enough to give me a reason to buy it.
Ugh. More bad news. I ran rental comps on the area, and prices AVERAGE $0.59/sf (note: I would offer less fr a rental to get someone in ASAP), making the payments on this property roughly $600/mo. I plugged in what I know about the financials on this property, and came up with a monthly expense of $830.
Definately a non-workable deal in my book.
Oh weel. They can't all be golden opportunities. :-)
It's really interesting what you can find out about other people's public information. I did more digging on what the owner of this property did to get it. It appears he refinanced last year for $88,500 and got a 7.25% ARM that includes a 2yr prepay penalty. I figured still owes roughly $87,900 and he would have to pay a 6mo interest penalty if he paid the note off anytime until mid-2006.
Just the payment on the loan itself ($604) exceeds the amount it could rent for ($604), and insurance and taxes would put this at >$900/mo. Ouch!
Thanks Brian.
I called the guy back last night, since I told him I would. I told him I ran the numbersand the deal just wouldn't work for me. I also told him I would pass on his information to other people I know in hopes of getting a bite, if it was alright with him. He thanked me for calling him back, and said he would appreciate me getting his info out to any interested parties.
It's funny, but each time I talked with him I was a bout of nerves several seconds ito the conversation, but it quickly dissipated. I guess over time, even the first few seconds of the conversation will be easier.
I'm STILL nervous about talking to sellers. My nerves are usually because I know sellers can be duplicitous and difficult to talk down when they're emotionally involved--which they usually are. I try my best to get over it each time before my feelings become obvious. As I've become more experienced, it has gotten easier.
Post a Comment