Posted by Bill K. (AZ) on March 22, 1999 at 10:14:38:
David,
First of all, congratulations!
Based on your numbers for FMV, this sounds like a good deal. Of course, you should always negotiate the best deal you can. But, as a rule, I believe that anytime you can get title to a property for a small down payment, in your case, a couple of back payments, some new carpet and tile repair, TAKE IT! Those expenses shouldn’t be more than about $3,000. Of course, this assumes that you’ll be able to rent the property for at least $734/month.
Since you are planning to L/O the property, you should be able to get option consideration of $3,000-$5,000 when you find a tenant/buyer. Hence, you recoup your up-front expenses quickly. PLUS, and here’s the kicker, you’ve got a $25,000-$30,000 payday coming when the tenant/buyer exercises their option.
I finally have my first chance at a L/O. I just recieved a call on my paper ad. It is a house in a very nice neighborhood(Edgecliff Village, TX.). The owner owes $68,000 on a first mortgage with payments of $734. The problem is they are 2 payments behind and the house needs work. All they want as far as price is the payoff, which is $68,000. They have no idea about the FMV, but this is a wealthy neighborhood, so I imagine, its worth at least 80-100,000 or more.
3-2-2 needs tile and carpet replaced.
Question: Is this worth taking on, since it needs carpet and tile and they are behind 2 payments. Any help or suggestions would be greatly appreciated.
I’m familiar with that area. I have a rental close by. Property there do sell well. Look at your repair cost if you want to do repairs. Get comps quickly!!! You could also sell this as is to a handyman.
If the numbers fit your criteria, go for it. Just make sure you do your research of the houses sold in the last 12 months. It sounds good!
One other thing is that you could have the two months worth of payments listed as full prepaid rent credits toward the final cost of the house. Dont list them as option consideration or anything like that (security deposit).
You can find a lot of companies that will install carpet and tile and not charge payments or interest for a year and by then if you close you would recoup the cost.
Just my .02
Terry