Deal #9, I call my ‘lots of contracts’ DEAL. About 8 hours of writing contract language… for $12K
Posted on July 26th, 2011
Hi DG family. I wanted to share my latest deal that’s in progress; should be closed by the first week in August. I was not allowed to assign this deal, so it makes for a lot of paperwork as I’m simply doing a quick flip on it, but I have to cover my ASSets.
(Yeah, me, you know, I love to take on new adventures and try different things out. )
I’m buying this property in IN for $26,000 (26,775 out the door after closing fees and such). The property needs about $10-15K in work. I’m immediately selling it to the end buyer, but with a twist.
My self directed IRA is purchasing the property. I’m in the process of having the appraisal completed, but the ARV is approximately $85K.
As for repairs, there is no functioning bathroom in the house. All the fixtures have been removed; sinks and commodes gone; everything gone from shower, water heater’s gone, but they left the kitchen and cabinets in tact and the house is in good shape otherwise. And, all the plumbing and electrical is run. So, repairs are about $10K.
My end buyer is going to be living in the property and he is a general contractor. He will pay $1500 upfront and repair the property getting proper permits and such, and then $1000 a month for 40 months; at which time I will deed the property over to him.
In the end, what I’m doing is seller financing it to the end buyer; in a way that IN law will allow, but I’m still talking with several people about IN laws and will most likely end up doing a lease option on the other side, but calculate it out with the amount of principal going towards the option each month. My main concern with doing the l/o is the insurance, as usually an out of state owner will pay much more in insurance, so I want to work out a way for the tenant buyer to carry the insurance in his name, but I escrow the payments into the monthly payment and I’m on the insurance as a loss payee. (Not sure how I’m going to do that yet!)
I’m selling it to the end buyer at $31K as is, but will make another 8K in seller financing, so my total profit in this deal will be almost $12K for a couple hours of busy paperwork and lots of phone calling. Not too shabby!
And, worst case, if the buyer should walk away after all is said and done, provisions in the contract make it so he has to surrender it in good condition with all repairs, and I’d pay him $700 to move for leaving the property in tact without removing any items.
Oh, and in the meantime, while I’m trying to refinance my deal # 5 property, I have $1000 more per month in income coming in. I’m GOING to get that house refinanced because of this deal!
It is CERTAIN I will SUCCEED!
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Tags: Deal, Deal Hours
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