Just got one this a.m. - Posted by Jim IL
Posted by Jim IL on June 14, 1999 at 15:30:36:
Here is what we did this a.m. :
We met with our sellers, and arrived with the L/O agreement “mostly” filled out.
We just left the dates of commencement, and final sales price blank.
We wrote in our contract a 24 month period with 2 renewals.
We had previously (first meeting with seller) explained “How” the L/O works, and what our basic terms were.
After we finished negotiating the sales price, when we take posession and when our first payment is due, we read the entire agreement line for line to the seller.
We stopped after every page and asked if they had any questions?
They said, “no, thanks for explaining this all to us, we understand”, and then we all signed the agreement.
The sellers just assumed that we ALWAYS do a 24 month, 2 renewal period L/O and we never said otherwise.
Bottom line is: We have the place tied up for 6 years, making the mortgage payments (as they stand now) as our rent payment.
We have two months to find a T/B’er before our first payment, and we got the price below FMV now.
There were some “other surprises” today as well. This is a Townhome with a “homeowners association” and a small monthly fee due to that. The seller insisted that he make the association fee payments, because he wants to “deduct them”. (whatever that means, I don’t see how he can or care, he is going to make them and I’m not…YAY!)
We also let him speak first on the price he wanted, and he came in $4k less than we were willing to go.(as my wife kicked me under the table to “accept” his low price QUICK!, but I know, we HAVE to ask for “Better”)
We then said that $1k less than he offered was our “max” but because we felt “good about the deal”, we were willing to split the difference, and go up $500, if he’d go down $500.
FMV: $68k, now
Our option price: $60,500.00
Monthly Rent: $550.00
24 months, (renewable for 2 terms of 24 months)
We also get to keep appliances.
We will sell this on a L/O to our buyer for:
12 month L/O
$78k sales price
$3k-$4k option money upfront
$900/month rent payment
Our buyer can renew for another 12 months, for an additional $1k, and the “option price” will increase as well.
And with luck, our buyer will FAIL to excercise the option and we can do it all over again.
After all, we have this place “locked up” for 6 years.
So, do this yourself. If I can, anyone can.
Good luck in your investing,