Posted by SusanL.–FL on April 16, 2001 at 08:11:46:
nt.
2 L/O Possibilities?Yay or Nay?? - Posted by SusanL.–FL
Posted by SusanL.–FL on April 14, 2001 at 13:57:06:
A day and a half after the convention, I came across two properties that the owner said he would lease option to me.
Happened to be driving the streets looking for properties when I spotted a For Rent sign in front of a duplex. Called the owner from a phone booth and met him there two minutes later. Turned out that the owner was actually inside the duplex getting it ready to re-rent.
We chit-chatted for quite awhile then I said that what I REALLY was out looking for were Lease Options. He said, ?HEY! I really like your aggressiveness!?
Said he had 2 properties that he would consider L/O ing to me. After I viewed them, red flags went up in my head ?so I want your opinion. Keep in mind that I haven?t ever done a L/O before.
One was a 4/2 C/B, really decent neighborhood. Has long-time HUD renters in place who pay about $825/month in rent. He said that that is about their max$ rent-wise.
There is a downside: the renters are flea-market junkies. Stuff stored from floor to ceiling.
Another downside. Owner bought the property for $30K and re fied it for $85K. He dumped the profit into the stock market?and the REST is history folks–he lost a good portion$ of it. SO! He said that he would give me a 20-year option with a VERY stiff prepayment penalty IF I exercised my ?option?. He doesn?t want to get hit with capital gains taxes.
He also said that that property would be a break even$ each month. I said, ?HEY! I?m in this to make some MONEY each month; not just break even!!? I mean?.gimme a break?.
Well, I toured the house (flashed the seller?s business card) and told the tenant?s that I was his appraiser?and they let me in. Unbelievable (mess)? Believe me when I say that there was BARELY a PATH going from room to room that you could squeeze through. From floor to ceiling. The back yard was WORSE!!! Junk EVERYWHERE. Refrig./stoves/car engines etc. were shoulder to shoulder out there. Couldn?t even walk through.
Owner said that Code Enforcement was on his back (b/c of renter?s mess.).
We haven?t come up with any numbers on this place cause I wouldn?t know how to estimate for 20 years down the road. He also said $5K down ?but would be negotiable (at which point I would say: ?how close to zero$ can you get?? 
Next property:
Wood frame (which I?m not crazy about). Think it was a 3/2. H/W floors. Not in bad shape. Neighborhood was a lower working class. Decent sized yard.
Rent is about $750.00. The renters (a tattoo artist and her family) are looking to move. House down the street is selling for about $65,000. Family are also slobs, mainly messy. Stuff/clothes stacked EVERYWHERE.
HOWEVER, they have a dog and a litter of kittens. Smelled like they hadn?t changed the litter box in a year. It was pretty bad.
Renter said the roof leaks in a spot and the A/C doesn?t cool that good.
Sound like anything do-able here folks or should I KEEP ON lookin?! It?s scary enuf doing something new (L/O) let alone taking on someone else?s problems (code enforcement, etc. and that talk about just breaking even).
On the PLUS side, turns out my seller has been doing his little r.e. gig for 21 years. He is also a licensed mortgage broker. His wife is ALSO a mortgage broker in town and she works for some ?mover and shaker? in town.
Thanx for the input.
Since the phone company couldn?t hook my second line up yesterday (said there is a cable problem and I?d have to wait another 10-15!!! days), I?ll have to log back onto CRE later. Have an ad running this weekend so I need to keep my phone line open. Darn pain in the a * *.
Thanx. Susie