Trying to create a deal it doable? - Posted by Mikr

Posted by mike on December 02, 2002 at 19:10:30:

Well, I guess that’s what comes with experience - determining how motivated someone is and deciding whether to move forward or to move on. This owner told me someone recently threw a rock into a window of the house, thereby making him even more motivated - I just don’t know whether he’s yet motivated ENOUGH for me to create a deal where I can make some money.

Thank you for the advice.

Trying to create a deal here…is it doable? - Posted by Mikr

Posted by Mikr on December 02, 2002 at 18:53:11:

Vacant house built 2.5yrs ago in an area appreciating 10%/yr. Owner is willing to lease it for 1 yr (not any longer) and wants to cash out at that time at an appreciated price of $187k. The current value is $170K and the mortgage is $145K. With the rents in the area, there is no room for a monthly profit spread.

Are 1 yr l/Os even doable? If so, is there any room for me to make money?

SHould I instead have him refi and cash out, taking the prop subj to the new loan, and have him carry a note for the difference?

Or convince him to sell on a 2 yr l/o, perhaps splitting any equity above a certain price?

Any other suggestions? Thank you

I Agree With Dave - Posted by phil fernandez

Posted by phil fernandez on December 03, 2002 at 05:42:12:

You make your profit on the way in and realize it when you sell. Will the property appreciate from $170,000 to $187,000 in one year’s time. Who knows, even if prices have been appreciating by 10%. There’s no gurantee that they will continue to rise at that pace.

Furthermore, you should be the one to benefit from any future appreciation. Your seller wants his cake and also wants to eat the cake. On top of this you mention that there is no cashflow so I don’t see a deal here unless you can get the property below CURRENT market value to the point where you can also make some money on the monthly cashflow.

You don’t need this deal.

He’s doing what you’re supposed do! - Posted by DaveD (WI)

Posted by DaveD (WI) on December 02, 2002 at 19:53:14:

Anyway you slice it it still comes down to buying low and selling high. Trust me, if he was motivated he wouldn’t be worried about future values a year from now. That should be one of YOUR bonuses. You are also boxed in with an unrealistic timeframe and no cashflow in the middle. Since he isn’t willing to leave anything on the table for you. . . NEXT!

Re: Trying to create a deal here…is it doable? - Posted by wpage

Posted by wpage on December 02, 2002 at 18:59:18:

Mikr My suggestion would be to move on. Definitely not a motivated seller and one who wants his cake and eat it too. There’s no deal here for you to make money!! IMHO wpage

Re: He’s doing what you’re supposed do! - Posted by Mike

Posted by Mike on December 03, 2002 at 01:58:02:

Thanks Dave,
Advice noted and locked into memory. It’s just that as a newbie, I’m trying to make every deal work, even when it’s not passable. But from now on, I’ll be more selective and will be willing to walk away when the deal is not right.