I agree with that Ed and I wouldn’t normally be doing this deal. However, it is for my own personal residence and I am pretty certain that I will be a good tenant to myself.
So how about an affordable house? Something you would typically invest in. Could you describe to me your typical investment and if you were going to assign the contract from another investor, what would be your range for the flat fee you would be willing to pay?
I’m just trying to get a sense of what others pay or would pay to assign an investment deal so if I end up assigning the above deal for my personal residence I can have some other view points to work from other than my original thoughts of what I think is a decent assignment price.
Thanks for the responses guys. So if there is no model to go by then let me ask what you would do…
On a lease option deal where the purchase price was $500k, no upfront money paid to owner, 3 year term, $25k in initial captured equity, 10% appreciation rate, positive cash flow each mo, …What would be your guy’s own personal range for what you would feel comfortable paying to assign the deal from another investor?
I’m starting to look at deals similar to this right now and could use a few real world examples. Thanks!
Re: What are you guys comfortable with? - Posted by Ed Garcia
Posted by Ed Garcia on April 03, 2006 at 01:04:47:
Brian,
This is not a deal I would do.
When doing Lease/Options, I suggest you do them on properties considered affordable living. Market rents on a $500,000 house usually won?t cover the mortgage payments when refinancing.
Today with credit so available, for a tenant to have to do a lease/option, chances are they?re a credit criminal. You?ve put a lease/option together on someone I wouldn?t even rent to. Lease/Options are also a vehicle used when the house won?t sell.
Lease/Options are a good way to put deals together with little exposure, however when doing deals; they still must make economic sense.
