Would you do this? - Posted by Andrew

Real Estate Investing
1

Posted by SteveS(CPA) on June 20, 2001 at 15:37:30:

…Sounds like to much trouble

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Would you do this? - Posted by Andrew

Posted by Andrew on June 20, 2001 at 15:21:37:

Need a little advice on this one. My instinct is to pass, but thought I should let the experts take a shot at it. Got a call from a tired landlord that has a 2 bed/2 bath house they want to get rid of. Okay, middle class neighborhood, no real chance of big time appreciation.

Here are the numbers:

FMV = $117k
Mortgage = $105k
PITI = 1005/mo (includes PMI and is current)
Current Rent = 950/mo (about average for the area)
Repairs = wood floors need refinishing, interior paint

It is occupied (at 950/mo) and their lease ends July 1. The seller is willing to let me have it ‘subject to’. I was thinking of taking it and Lease Optioning for $125K at $1,100/mo with 3 to 5% option consideration (or whatever I can get with the rest of the 5% paid over the next 12 months).

If it had another $5k in equity or if the payments were $100 lower, I’d take it for sure. Am I being too picky or is this too skinny anyway. Well, what do you think?

Thanks for you help!
-Andrew

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Thanks for the input! - Posted by Andrew

Posted by Andrew on June 21, 2001 at 09:16:20:

Thank you all for your insights. While I was thinking this one over, two much better deals have popped up so I’m gonna pass on this one.

Thanks again.

-Andrew

4

Re: Would you do this? - Posted by Terry(IN)

Posted by Terry(IN) on June 21, 2001 at 08:32:53:

Andrew,

I tend to agree with JimIL. One other thing I would check out is the current renters. Would they like to own the home they are now renting? Are they able to come up with option consideration? Would they be willing to pay $150 a month more to become a home owner? How long have they been renting this home? Have they always paid their rent on time?

Just something else to contemplate.

Terry(IN)

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Re: Would you do this? - Posted by Rose

Posted by Rose on June 20, 2001 at 20:20:33:

Trust your instinct. I won’t buy it.

6

Maybe - Posted by Jim IL

Posted by Jim IL on June 20, 2001 at 15:39:07:

Andrew,
Without knowing your market, it is hard to tell you anything.
What will this place rent for as is?
Fixed up?
Being a 2 bedroom would bother me a bit, I’ve found that they do not move as fast as a three bedroom home.
The repairs? What will that cost?
Can you find a T/B’er who will do them?
Do you want to?
Are you able to do the repairs or pay someone to do this?
How long can you hold this while limiting your cash outlay?
Will the seller contribute at all?
Can they make any payments and allow you to have possession for a while?
What can you do to improve the value?
See, I’m not like some investors, I will take on a deal with little cash flow,sometimes,if I can make a decent upfront option money profit, cover the payments, or I see that the cash flow can increase easily in a short period of time and a combination of them all.

Do you know anyone looking for a 2 bedroom home? Any buyers waiting in the wings for you?
And I’d certainly want to make sure the home was in the same shape it is today when the current occupants leave.

Just some things to think about,
Jim IL