Posted by RJ-MA on July 01, 2002 at 18:23:35:
Matt,
I’m only 2 months into CREI and in the same situation you have described. I don’t want to wait the 4-6 weeks to secure the loan and close, so I’m going the L/O route. You may not have the same time constraints so it’s up to your personal situation.
Now if you know you’re not going to be there long or you may look for a better home once you get in, then I’d say go L/O. Try to get a long lease term with sublet rights with payments as low below current rents as possible. Then when you’re ready to move you can sandwich lease to someone else for positive cash flow.
As for your realtor friend/of a friend, s/he sounds like a good connection, so be upfront and ask how they would like the commission handled. Maybe they’ll take it in payments, or some now/some later, or make it up on the next deal, etc. Won’t know until you ask.
Good Luck, RJ
Buy Conventionally or Lease/Option ? - Posted by Matt Dickinson
Posted by Matt Dickinson on July 01, 2002 at 04:01:28:
I’m looking for a house to buy as a primary residence. I found a great deal through a realtor. The asking price is 140,000 and the real estate agent said I can probably get it for 130,000. This is a handyman special, but houses in the area are comping at 195,000 and up. All the houses surrounding this house are in great shape.
The owner is selling because she is sick and doesn’t want and can’t maintain the house, she would rather rent. I found this house through a realtor.
Besides getting a conventional loan to buy the house, I was thinking about asking if she would lease/option to me. That will allow me to pay down the price of the house and save even more money for a downpayment. I would tell her that I would maintin the house, make her mortgage payments and she can move much sooner than waiting weeks to close on the house. She would also avoid closing costs now. I would give her some walking money up front as an option deposit so she has money for her months security. So far it seems like a combination rehab and lease/option deal. The only problem is that a realtor is involved.
The realtor is a friend of a friend. While he was showing me a number of handyman specials and he was always saying how I could fix the house up and then flip it in a year to make a profit. So he seems to understand how investors think about property. In fact, I will go to him for helping find my wholesale houses after I find a home of my own. He is not the listing agent, so he won’t get a large commission. But since I’m not closing now, he won’t be paid now.
So my questions are:
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Is lease/optioning from the owner a good idea, or should I use another technique? The only techniques I know right now is wholsaling/retailing and lease/options. I don’t know about subject-to and owner financing yet. If one of those techniques is better that doing a lease/option please let me know.
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How do I present this idea to the realtor? What should I offer him? Maybe offer him some of his commision now and the rest later when I refinance the house? Any other suggestions?
I will have to move on this house fast. In fact this week I’m meeting with the realtor again and possibly the owner.
All opinions and suggestions are appreciated.
Regards,
Matt