This sounds like an exellent opportunity to lease with an option for the whole property. Sell him on the fact he won’t have any management headaches whatsoever. You will take care of everything. I assume the place is Free and clear, (no debt) so get together with this guy and figure out what the land is worth, then agree on a price for each home. Then get an option drawn up to buy the land and the homes, get the price agreed on today, then get the longest possible option term you can get. Your consideration for the option to purchase will be your performance on fixing up the homes, cutting the grass, etc. Next, agree to lease the place for what ever you can make a profit at, but your payments don’t start until you have got everything cleaned and fixed and rented. For example, if you could get $800 per month, make your lease payment $500 or something you can both agree on that is fair to you both. Remind him if he gets too greedy that this is probably cheaper than hiring a caretaker, especially since you will more motivated. Recap: Lease long term at a lower price than you can get form your tennants, option to buy long term at todays price. The lease and option are seperate documents, and you want the right to assign your interest, especially in the option.
Go get 'em
Hi everyone…I have another possible deal and I need some advice.
Here’s the situation. I haven’t seen the inside of the homes yet, but the exterior is pretty good. 2 each 1973-75 12 x 60 2 br/1 ba about 4-5 miles outside of town. Nice lots with trees and bushes…needs mowed and some clean up. They appear to have separate gas and electric meters. Both vacant for about 2-4 months. The land is owned by an 82 year old woman and she can’t manage them anymore and her sone lives in Washington and does not want to deal with them. I told him on the phone that I was an investor and could only pay wholesale as I would be looking at rehabbing and reselling and he stated that he was very flexible and told me to drive out there and take a look and let him know what I would like to do. He stated, and I agree, that the land they are on would not be suitable for farming with the rest of the land because of it’s placement and hinted that he might be willing to sell the dirt as well, or lease it. He doesn’t know how long they will be holding onto the farm that this land is a part of. How would you all handle this? Would you try to purchase the land or get a long lease on it? What if the land is sold to another person; does the lease then pass on to the new owner. I would hate to have to end up moving the homes. What other things should I be considering? Would it be possible to offer to lease-option the homes for a year with all of the payments to be applied to the purchase price if I excercise the option, is that ever done? I get the feeling that he wants this dealt with quickly, before he returns to Washington from his visit here. I don’t have a lot of spare funds at the moment and would like to do this deal with as little out-of-pocket as possible.