Feedback on Lease Purchase Offer - Posted by Nick

Posted by Nick on July 10, 2003 at 15:04:26:

Randy,
Thanks for the reply. I probably should have listed more details and I can
see why you think there’s no deal… Usually the lengthy posts don’t get
read. The first loan on the property for $100k is for 5yrs w/ hard money
lender @ 15% = $2,379/mo. In 5 years the sellers payments begin $350k for
30yrs @ 7% = $2329/mo. The rent is low as is and the place needs some TLC so
when I finish I will rent out the sides for $1400/mo which would be
$2,800/mo income. The “additional building” is actually a newer 10yr old 4
bed 2 bath house that but is legalized as a barn. The owner was renting it
out for $2500/mo until she put it on the market and someone complained so
until she gets a variance she can’t rent it out to someone else. The
property was originally listed for $650,000. She’s a widow and lives 3hrs
away so she doesn’t want to deal with all the BS. But what I would do is
rent out the front house for $2,800/mo & stay in the back house until I get
the variance. I’m renting now anyway so that’s why its good for me. I’ve
already talked to a lawyer and he says it should go through no prob but the
taxes will probably go up also. Anyway I plan on condoing all 3 places
within 5yrs and selling two if not all 3… that’s where I’ll see my real
"beef". Please let me know what you think and if there is anything you would
do differently. I’ve only been studying RE Investing for 3yrs and this is
my first deal so I could use all the advice I can get. Thanks again for your
help!
Nick

Feedback on Lease Purchase Offer - Posted by Nick

Posted by Nick on July 09, 2003 at 17:47:54:

LETTER OF INTENT

PROPOSAL:

*Offer to Lease Purchase

*Sale Price $450,000

*Lease/Purchase Term 6 Months Reserve Right to Close Early (Will make effort to close within 2 Months)

*Rent payment of $2400/mo + Utilities w/ $1400/mo credited toward the purchase price. Monthly payments to start 30 days from move in (need time to fix-up & find tenant)

*Buyer is responsible for all maintenance & repairs

*Buyer reserves right to sublease

*Buyer reserves right to improve property

*When option is exercised buyer will give seller $100,000. Seller takes back a 2nd 30-year mortgage for the balance @ 7% interest with payments beginning 60 months from purchase date (at that time 2nd mortgage becomes a 1st)

*Buyer agrees to refinance and pay off seller as soon as possible

*$500 Earnest money deposit with realtor or seller on acceptance of contract (as early as tomorrow) 7/10/03.

Seller is asking $499k house is 2fam currently renting out for $1200 a side with additional 4bed 2bath building on 5acres. Seller is motivated & working w/ realtor (tried to do no money down but seller wants min $100k. $100k loan is for 5yrs w/Hard Money Lender. I plan on keeping the home for at least 10yrs. Would like some feedback please. Thanks!

I Don’t See A Deal… - Posted by Randy

Posted by Randy on July 10, 2003 at 12:50:44:

The first issue is there?s NO Profit. If I?m reading your question correctly your lease payment is the same as the rental income except for the ?additional? property you have no cash flow. Using a 10% CAP rate on $28,800 income ($1,200x2=$24,00x12 mos=$28,800) the market value of the property is $393,600 with no expenses.

If you kept all three properties occupied (the additional property @ $1,000 /mos you would realize a $10K cash return. The sellers $100k reduces your cash return to $1,284 if you financed it @8% PI - $773.00/mos

If you financed the $450k @ 8% PI= $3,301.94?.Where?s the beef?

Re: Feedback on Lease Purchase Offer - Posted by Nick

Posted by Nick on July 10, 2003 at 10:25:08:

Anybody?