Hi Everyone,
I'm looking for some advice from creative real estate investors with more experience than myself. I've located a property about 2 streets away from where i live in Sydneys North Shore. The property is a forced sale by owner. Due to unfortunate family circumstances, the vendors are looking to sell rather quickly. When i enquired about the property i was informed that the vendors do not require a deposit and they are basically looking to secure a certain amount from a purchaser and finance the rest to help an easy sale. The median house price in the suburb is mind $700,000 with this particular property being substantially larger than average (i drove by and had a look this afternoon). The asking price is 'around $1m'. As their situation becomes more and more urgent and with a slowing real estate market i feel as if the asking price is unrealistic.
As far as investment strategies are concerned, i'm not interested in buy and hold largely because i'm not in the financial position to maintain the loan even if it is vendor financed. It is too expensive to wrap/lease option and is by no means an average house in an average neighbourhood. Supposing that their situation dictates that i could purchase the property substantially below market, i could exchange contracts by either a) signing them 'and/or assigns' and arrange for simultaneous settlements with a 'subject to' clause if i couldn't find a purchaser or b) taking an option over the property and assigning the call option to the ultimate purchaser. Alternatively i could contact other real estate investors who are looking for a strong buy and hold deal and 'sell them' the contact for a commission if they did end up buying the property.
Does anyone have any comments/advice on which road i should/could take – especially whether my exchange of contracts idea is plausible.
Thank you all in advance,
David
[email protected]I'm not sure…it's out of the range I focus on and or in a market i know nothing about. But when I read into the situation I see one main problem and that is that it may be difficult in this market to find a buyer and if you get stuck with the property then you will be rowing the same boat as the current owners.
Personally I would stay away from it. Others may see a different opinion. I would much prefer the same variables on a lesser priced house where there is more chance of securing a buyer come resell time now or soon. Buyer Beware!
Hi Daniel,
Thanks for your comments. I agree that the situation would be prime if we were talking about a $300,000 house in Suburban Sydney where the chances of a quick on-sell are much higher. I literally would not have to money to be stuck in the same boat as the vendor. If i couldn't find a purchaser to assign to within settlement period i would have to bail out using a clause or just not exercise the option if i went down the option road.
It seems criminal to let the opportunity sail on by – no money down, motivated, flexible vendors are music to a real estate investors ears…
davidcball wrote:Hi Daniel,
It seems criminal to let the opportunity sail on by – no money down, motivated, flexible vendors are music to a real estate investors ears…Its only an opportunity if you were getting it below market value and that is not on offer at the moment.
bardon wrote:Its only an opportunity if you were getting it below market value and that is not on offer at the moment.
Hi Bardon,
What would you do in this situation? I realise that it's naive to think that the vendors would definately accept any below market offers that i made… Chances are they won't. What i'm trying to ascertain is whether or not this community thinks it would be worth my while making an offer and if so how would i go about it?
Regards
OK, well what's your worst case senario risk here? How much time and money do you stand to loose here if you can not sell the property.
And good point about the 'get out clause' absolutely make sure you have a water proof one if you we're to go ahead with it!
Jaffasoft wrote:OK, well what's your worst case senario risk here? How much time and money do you stand to loose here if you can not sell the property.And good point about the 'get out clause' absolutely make sure you have a water proof one if you we're to go ahead with it!
Ok worst case scenario is that i couldn't place it with a buyer. Usually i would stand to loose my deposit, but since it's not required, i won't offer them one. I would spend a few hundred dollars on grassroots marketing and advertising (newspapers, flyers, signage), another few hundred dollars on legal and a whole bunch of my time running around like crazy putting the deal together… BUT im getting ahead of myself.
If i was going to make an offer it would be $750 – $800k (75-80% of market), 90 day settlement subject to finance and approval of business partner…The chances of the offer getting accepted are laughable but you gotta be in it to win it am i right? The worst that can happen is they say no.….And now to expose my exact stock of accumulated real estate investing experience to the wider community…. How exactly do i go about submitting a written offer as i have never done it before? Do i give it to the vendors or is it protocol to approach an agent to act on my behalf?
Well i'm not a salesmen but if you purchase the 'Buyer Beware' product from this web site you will get as much benefit from it as I have got from it. It has an official offer template to print off and sent to the agent or fax.
You need to be very careful with what subject to clause you use. Get a few second opinions on that. Also an extention of the settlement might be worth negotiating into it.
Again, I don't know if this deal is good or bad i'm just stating a few things here. I just had a deal where nothing was ready for settlement for the first three months and council has taken 5 months. Yours doesn't involve council plans etc but more time if needed up your sleeve is better.
Thanks Daniel you've been really, really helpful! Shame you don't receive commissions from the website, the buyer beware package looks like a must have.
Thanks again
davidcball wrote:bardon wrote:Its only an opportunity if you were getting it below market value and that is not on offer at the moment.
Hi Bardon,
What would you do in this situation? I realise that it's naive to think that the vendors would definately accept any below market offers that i made… Chances are they won't. What i'm trying to ascertain is whether or not this community thinks it would be worth my while making an offer and if so how would i go about it?
Regards
Make a low Offer you have nothing to loose and at the very least it will be good experience for you
You must be logged in to reply to this topic. If you don't have an account, you can register here.
