Any deals here? Kinda Long - Posted by SteveG_Pa

Posted by SteveG_Pa on June 23, 2002 at 23:05:16:

Thanks for the reply Clair, I did basicly asked that during the call (what would she do?), she really had no problem renting it, she said “heck, I may want to move back there someday”, she was only worried about the maintenance on the place after tenants move.

I think Ill walk on this though, Im sure theres an easier first deal out there. I guess Im just trying to flex my new “creative muscles” a little. Thanks for the help.

Steve

Any deals here? Kinda Long - Posted by SteveG_Pa

Posted by SteveG_Pa on June 23, 2002 at 21:18:00:

Hi, Ive run into a property I have a feeling I’m supposed to walk from, but decided I’d ask some experts before I did just in case. Here’s the scenario so far;

  1. Asking $159,500 cash as is
  2. Only searched online comps so far but it seems to be close to right.
  3. 4 BDR/3 Bath, 1900 sq. ft, nice yard (.89 acres).
  4. PITA is $1,450 a month.
  5. She’d rent it for that amount.
  6. Owner lives in Florida and has only owned the house about 2 years, sister is in the home now, but moving out in Aug. to go to Florida.

The area is in something of a subdivision, Called Colony Association, they have a clubhouse, yada yada yada.

Anyway, its in a very nice area. So, I call her up in in Florida, and talk to her about the house, she doesnt seem real motivated, but a little willing on terms.

Well, after talking to her, I decided to let go of the property, but I left her my email “just in case”.

Today I got an email that says;

"Hello

I wanted to get back to you about the house. These are the options I would consider for selling or renting:

  1. rental for a year at $1,450, first month?s rent and deposit of 1,450 up front.

  2. sell as is for $159,000.

  3. lease to own terms would be 1,700 for two years w/1,700 deposit: repairs paid by puchaser up to $1,000

Whatever is decided I would have to run a credit check before proceeding and I would also draw up a contract with a real estate lawyer of my choice.

Call me to let me know."

I know this really isnt alot of information to go on, but what would you do in this case.

BTW…this would all be contingent on my trip to courthouse and water authority, and a title search, which I may start tomorrow depending on tonight.

Im a newbie on this so cut me some slack, but I think I’m walking, maybe running from this…and no I have no cash, or credit, exit plan was to L/O it around what she wants me to pay. Ok I think thats it for now :slight_smile: Thanks for any ideas everyone…

Steve

Run dont walk - Posted by waynepdx

Posted by waynepdx on June 24, 2002 at 01:52:37:

Ok… Clarify some things.

You wrote:1. rental for a year at $1,450, first month?s rent and deposit of 1,450 up front.

  1. lease to own terms would be 1,700 for two years w/1,700 deposit: repairs paid by puchaser up to $1,000

Now is the price 1450 or 1700?

This lady is not the least bit motivated in anyway.

I will never submit to a credit check from people. Just by them asking is a red flag that they are not motivated.

And why did she bring up the point about repairs being paid by purchaser up to 1k. If her sister is living in it, then the sister should be taking care of her sisters property.

This throws up another red flag. So I would add another 1k at least to the price of this home.

This is what you do.

Find the FMV and offer her 3 deals.

One all cash at 70 percent of fmv minus repairs to bring it to FMV

Find out what the rents are going for in the area and structure a 1 lease options offers from that.

2-Make her an offer if say the rents are going for 1200. Offer her 1000 a month with 150 applying towards the purchase price. Make sure you dont even mention option consideration. Those words never leave my mouth when I am the Optionee. Make it so you have one years with the right for 5-1 year renewals.

L/o #2: Same deal as above but with 250 applying towards the purchase price but with a thing called equity sharing. Tell her that each year the option to purchase is not exercised that you will share with her the equity that has built in the house. Tell her you will add an additional 1k to the purchase price as each year goes by that you do not exercise the option.

Make sure you shoot for it to be added to the purchase price, and with your t/b have then surrender it as additional option consideration should they need to extend for another 12 months.

That way you get cash in your pocket and dont have to give any to the seller.

You are getting some of that back end profit now.

Oh also make sure that the deal with your t/b states that each year they do not exercise then the purchase price is adjusted up x amount of dollars and is immediately surrendered as additional non refundable option consideration or they are in breach of contract and all monies recieved are surrendered. blah blah blah.

Hope this helps you.

Re: Any deals here? Kinda Long - Posted by Clair-MO

Posted by Clair-MO on June 23, 2002 at 22:20:30:

Steve, Everything is “negotiable” in this deal even though the owner doesn’t seems to be really motivated but I would ask her the question “What will you do if you don’t sell it right away?” Listen carefully what she replies!!! This will give you some idea of her motivation in selling on a lease optioning. Work on “terms” be honest with her about your credit rating and ask if she would still sale it to you with a deferred down payment over say 36 months where you will be working on your credit rating so you will be able to cash her out at that time! You might have to show that you will be able to make the payments that she is asking monthly. Just a thought! Email me for more suggestions if you like.

Re: Any deals here? Kinda Long - Posted by Clair-MO

Posted by Clair-MO on June 23, 2002 at 22:19:26:

Steve, Everything is “negotiable” in this deal even though the owner doesn’t seems to be really motivated but I would ask her the question “What will you do if you don’t sell it right away?” Listen carefully what she replies!!! This will give you some idea of her motivation in selling on a lease optioning. Work on “terms” be honest with her about your credit rating and ask if she would still sale it to you with a deferred down payment over say 36 months where you will be working on your credit rating so you will be able to cash her out at that time! You might have to show that you will be able to make the payments that she is asking monthly. Just a thought! Email me for more suggestions.

Re: Any deals here? Kinda Long - Posted by michaela

Posted by michaela on June 23, 2002 at 22:15:05:

what can you gain in this deal, even, if you had the money? asking price is fair market value, if i understand you correctly, so, you won’t have equity.
she still doesn’t sound like a motivated seller.
i personally wouldn’t want a deal like this, but then i’m not into lease-options, so my opinion is not based on experience in that field.
michaela