As I pointed out in a comment to my previous blog entry, the deal on the SFR over the weekend just doesn't seem to be there. Last night, I ran some more comps, and found the BEST it could sell for would be around $155,000. Now, "BEST" in this circumstance means highest price in a seller's market for the area (for example, during the summer months when families are trying to get settled in before school starts). Since this isn't the "BEST" circumstances, I would have to deduct about 5-10% for a quicker sale. That would bring the price down to about $147,250 (5%). Deduct another $3,000 for paint, carpet, and "other" repairs: $145,250. I figure even with a 5% deduction in price, it would probably still sit a minimum of 2-3 months waiting for a buyer (and their lender): $145,250 - (2 x $1,543) = $142,164. Add another $2,000 for closing and miscellaneous, and that puts the final price at around $140,000 (and that's selling FSBO - with no Realtor fees). And this is a VERY liberal estimate. Since they owe about $146,000, this puts the deal in the red. My MIL suggested I just offer them something like $100,000, and after thinking about it, I could be a little more creative. The lady didn't appear overly anxious when I was talking with her, so I don't think she is highly motivated yet. If they are REALLY anxious in selling, I could offer to take the property Sub2, and create a note for the difference. IOW, they owe $146,000, but I want it for say $120,000. I could create a note for the difference: $26,000, and they would pay me monthly installments (something like 20yr loan at 3%, or $144/mo). I've never heard of anyone doing this, and, quite frankly, doubt it would be safe in my case. If it'd work, I could then fix it up, retail it, transfer the note to another property, and have a little CF for the next 20 years. Just an idea that's floating around in my head.
When I got up this morning, I noticed I had a voice message on my cell phone. I listened to the message and it was from a lady who wanted to know if I buy single-wide mobile homes. I immediately thought of Brian. She didn't leave any other information (except her name and phone number). I guess I'll give her a call today to see what the deal is. Who knows ... It could be a diamond in the rough. :-)
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The more I think about this, the more I don't think this would be such a good idea. First, since I would be taking the property Sub2, I would be the owner. Therefore, the note creation (against the property) would be useless. Second, this would mean we would have a contractual agreement only. If they stopped paying, my only recourse would be to go to court. Being that the amount is >$5k, it wouldn't be small claims, either. So in the end, I would probably do good to break even on the deal. Thus, it's no go.
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