Posted by Leonard on September 24, 2003 at 17:48:46:
Let me make sure that I understand your suggestion. I would get the deed subject to the existing mortgage and then retail the property as a handyperson special?
In order to get a handyperson buy I may have to be ‘generous’ with the pricing but then money today is worth more than money next year.
Please add any ideas or suggestions on the selling part. Thanks.
Leonard
Am I overlooking any problems here? - Posted by Leonard
Posted by Leonard on September 24, 2003 at 12:10:50:
Here’s the deal. I’m in Florida and some people are willing to walk away from a property because they don’t have the money for some electrical repairs. They were told that it would cost $1200-$1500 to replace what’s needed to get the electricity back on.
The balance on the place is $39,000. Cleaned up and repaired I estimate that the market value is $60,000-$62,000, so the potential profit is around $20,000.
They have a 1st and 2nd mortgage. They are willing to cover the 2nd; its paid off 3/04. The 1st is $472 and rent on a lease/option should be at least $550-$600. I plan to market it as a lease option/handyman special since I don’ want to put any money into it in case something goes sour.
I may need to give some concession somewhere since the end user will need to repair and clean the place . My request of you readers is this; am I overlooking any major problems here? This will be my first deal and I don’t have the vision of an experienced investor.
Any and all comments are appreciated. Please do respond. Thanks
another caveat… - Posted by gerald(tx)
Posted by gerald(tx) on September 24, 2003 at 13:22:55:
You say the seller will pay off the 2nd, but he doesn’t have enough for the electrical repairs. This tells me that he says he will continue to pay it off in monthly payments until next March.
Sellers who walk away rarely fulfill these promises. You had better be prepared to make these payments also, or the 2nd lienholder can foreclose on you.
Re: Am I overlooking any problems here? - Posted by Randy
Posted by Randy on September 24, 2003 at 12:34:17:
Electrical repairs are tricky? you can?t have a do-it yourself handy man doing those types of repairs, especially if the electric is off and won?t be turned back on until repairs are made, that requires an electrician and a building inspection by the city building inspectors. Get a solid bid from an electrician before you go any further. Having and tenant take on that task, the risk is fire, death and major law suits to you.
How did you arrive at the market value of $60k? Looks like a goods deal here but I suggest you repair the electrical problem, have it inspected by the city and let your handy man T/B do the clean up. You should be able to get the $1200-$1500 right back in your L/O consideration.
Re: Am I overlooking any problems here? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on September 24, 2003 at 12:24:15:
Leonard–(FL)--------------
I’d suggest instead of a lease option that you just get the deed to the property and resell it as a handyperson special.
That way you collect the profit right away and can use that to help you do other deals. That is far better than waiting a couple of years for yor payoff, in my opinion. Also, you avoid any risk of property values falling over the next few years.
Sell it and dance to the bank.
Congratualations on getting such a good deal.
Good InvestingRon Starr****
Re: another caveat… - Posted by Leonard
Posted by Leonard on September 24, 2003 at 17:34:40:
Sage advice. Since it’s just to next March it won’t be a deal-killer. I really do appreciate that insight. It makes perfect sense. Thanks.
Leonard
Re: Am I overlooking any problems here? - Posted by Leonard
Posted by Leonard on September 24, 2003 at 17:40:21:
The advice about the electrical is very thoughtful. I have an electrician friend who I will consult.
I arrived at the market value estimate by a little research online and also the tax appraised value is $47,000. It is just an estimate though.
Other than the electrical situation does anything else stand out as a problem? Thanks for all your input.
Leonard