Posted by Michele (OR) on September 09, 2003 at 19:11:08:
Congrats! At least you took action!
I don’t think it was that terrible of deal ~ you could have lost money.
I wish you a lot more success!
Michele (OR)
1st Deal Details - Posted by Jay (MI)
Posted by Jay (MI) on September 09, 2003 at 15:45:17:
Okay, so I picked up my 1st property on L/O. Let me start by saying that I was looking for a deal, and this probably wasn’t the best one out there. However, with help from people on this site like Mike(MI) and David Hutton, I moved the dog pretty quick.
Details:
2br/no garage/no basement/ 1100 sq-ft
Nice neghborhood, Private lake Access
Loan Amount $126K
Option agreement = $126k
Appraisal = $143k
Actual Comps (via Yahoo and neighborhood drive)= $138k
PITI = $998
Seller pays for 3 mo’s
L/O for 6 years in 6 mo increments (to limit my liability)
Also, the house was too far from me ~45minutes.
I advertised for the 1st mo in a local paper - alot of interset. But with no basement, no garage, and only 2 br, most people walked. I was asking $1,200/mo, $4k option deposit, $146k after 3 years.
David Hutton gave some advice on structuring the option deposit over a 3 year period, with the purchase ramping up over the 3 years. This was valuable consulting that I am thankful for.
I ended up moving someone in after 1 mo with $2500 option, plus 1st months rent. My 1st check was for $3,500 - not pretty, but based on the house I took, it was ok. Purchase price on the home if purchased in the 1st year is $138,500, 2nd = $142k, 3rd = $146k. Also, option deposit due 1 mo prior to end of year lease is $2k 2nd year, and $1,500 3rd year. I realize that there are some holes in my strategy, so no need to point them out. I will also get an additional $1k for the rent at the end of the month. My T/B has decent credit, and I have had many conversations with him. Either he is a great guy who went through a bad divorce, or a con artist.
So I will gross $4,500 this mo, and between $8k and $12k over the next 3 years (that, or I will have to evict, or move in another T/B).
Again, not the best deal, but what a learning experience it has been. I learned more than I would have imagined. This group helped me take what I would consider to be a marginal deal at best and turn it into a winning situation through creativity and coaching. Thank you very much.
I just wanted to share this story with the people out there sitting on the fence. Your first deal is very empowering, and helps remove the self doubt that most of us can run into.