Nathan Payne offers $304k-$307k cash for a distressed property, but Michael counters with higher offers around $410k. They explore seller financing near $450k, joint ventures where Michael keeps the property and Nathan funds rehab, and other structures before Nathan agrees to run the numbers.
Okay, so I'm about to call Michael. I just went to see his house. Terrible, terrible condition. I just sent him a text message of the photos from the property to show him that, you know, I saw it. It's a lot worse. We're gonna have this discussion. He just wants an offer. I'm not just wanting to make a quick offer and get off the phone. I'm trying to figure out how we can structure a deal. I'll probably offer $307,000. That's a Now, you know, looking at $307,000, I might have to go lower than that. So $304,000 gets us a 10% return on this property. If it takes us 6 months to rehab it, man, this house is bad. Okay, I'm gonna call him, and this is the kind of guy that's gonna try and just get your offer out of you immediately. I'm gonna try my best to not just make my offer immediately. We'll see how I do. I can talk a big game, but this guy, this guy's a freaking bull.
Hey Nathan.
Michael, how are you?
Good, thanks. How are you doing?
Oof, you know, it's a good day. It was quite the property you got there once I got down there and saw it. I'm pretty hesitant to make my cash offer just because I know it's a lot, probably a lot lower than what we initially discussed just without me seeing it. But it seems like you want a cash offer. Yeah, so I'm going to do a 1031 exchange, so. Okay. So like doing a sell, like if I were to buy it on terms and you finance me in the flip where I could pay a little bit more money. Are you saying that maybe not, that wouldn't be as intriguing to you?
It depends on the numbers.
I mean, okay. Okay. It all depends on what you're getting out of it. Are you open potentially to partnering up with me on this flip where, you know, you bring in some of the money and I do, I get the rehab going and we flip it together? Would that be something you're interested in or not necessarily?
I mean, if I was going to do that, why would I need you? I'm not going to pay someone a lot of money with no risk. To call a few people to come in and put new flooring in.
Of course, yeah. And I understand that's— it wouldn't necessarily be like, hey, you do, you pay for everything, and, you know, there's no risk on my end. I'm just, you know, I'm exploring options because after running—
No, no, that's— if you want to put up the money for the rehab, I'm open to that, but I'm not putting up— if I'm going to do the rehab and put up all the money, I'll just do it myself.
Right, no, no, that totally makes sense.
If you want to put up the money, that's fine.
Yeah, you know, because again, I want to— I'm exploring options on this one because I think if I were just to come at you with a cash offer, it would— I wouldn't want to offend you. And this one, after looking—
Just tell me what the cash offer is. You're not going to offend me.
Okay.
So for cost to buy house, $304,000. That's what you're saying?
That's what I'm thinking after running the numbers. You got $480,000 is the after-repair value of what I think I can sell this for if I fix up the landscaping, do a complete rehab on the house. I have my hard money costs, and I think it would take 6 months in total to rehab and list. And since I have connections with agents, I don't pay to list my properties. I just have to pay for a buyer's agent. So I got closing costs, $85,000 rehab. After everything's said and done, I'd make about $47K. You know, $304,000, is that something you're open to, or is that completely like not something you're not interested in?
No, it's not even close.
Okay. Then we kind of explore the different options of like the terms, where I basically go in there and I can make you payments, fix up the property, and it would be cheaper than me getting hard money, right? And then I list it and sell it when it's ready. That's a potential option. Or we partner on it and we figure out how much money I bring to it, if we split it or if I do the whole thing, how much you would walk away with, and would we split the profit above what we give you. You know, those are the options that I can see at the moment.
I mean, the best option, I mean, I would consider some sort of seller financing potentially. You know, initial number's $304,000. I mean, I've got offers at $410,000 cash.
Yeah.
So, I mean, for me to carry it for a year, I'd have to be at least $450,000 to make it— to make sense.
Which I understand completely. Well, if you got $410,000, I would love to just be, I guess, be be available in chat, I would have to come up obviously off of $304,000. But other than the cash offer, I know you're probably just going to explore what those other guys offered because they're much higher. But if we were to flip it together and I brought the rehab, if I brought the money, how would that look like to you? Like, would you be able to continue to make the mortgage payments and I just do the rehab and we kind of—
we could do something like that.
Okay.
Run your numbers on this and then get back to me and we'll go from there.
Sounds good. Is there any other scenarios or anything else you want to run by me?
Um, so I can, you know, I think that would be the, I mean, the cash offer doesn't make sense because I've got better offers on the table already. Um, but as far as the, uh, maybe the rehab, that might make sense. Okay.
And, and last thing before I let you go, if we were, if I come back and it makes sense to do the rehab, would you prefer doing that over a cash offer at $410,000 if we were able to rehab it together? Or would you rather go with the cash?
I mean, that would be, I mean, I mean, again, it depends on the numbers. What's the potential, you know, additional gain as opposed to, I mean, if I could make an extra $2,000, no, you know, I could make an extra $20,000. Yeah. Then it's something to look at. Does that make sense?
100%. Yeah. You're a businessman. What makes sense? I love it. So, okay.
But, um, okay.
Yeah.
Run your numbers, be in touch and we'll go from there.
I appreciate your time. Thank you.
No, I appreciate yours. Thank you. Bye.
I went decent. So pretty much what we have here is the cash offer doesn't work, novation doesn't work, um, but he is potentially open to partnering. We'll see. I gotta run my numbers, see how it goes.
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