How to structure the offer options? - Posted by buyslake
Posted by buyslake on April 24, 2007 at 24:24:32:
I found a for sale by owner sign. This house is only a block from one for my rentals. This is a decent house. I remember the people bought it just a year ago and I was interested in buying it at that time. She said they paid $35,000 for it and they put $5,000 into remodeling it. But it still needs carpets, some siding replaced (because they tore some of it off when they replaced some windows), a few more windows, and the kitchen needs to be remodeled.
The lady called said she wants 40,000 or BO. Now 40,000 already is a below market value. The tax assessment value is $75,000. She said she does not have any mortgage on the property.
This house is bigger then my other rental which I get $550 a month rent but $57 goes to city every mo. for water, sewer, garbage. So I know I could rent it if I am unable to sell it to cover my loan payments.
I’d like to flip the house. As a second option if I can’t flip it within a couple months I would advertise it as owner financing. If I propose a contract for deed, Can I sell it to someone else? Can I sell it owner financing?
As a last option I could rent it and come out with a positive cash flow.
I am a little confused between a contract for deed and a lease purchase. I lease purchase gives me the right to buy the house within a year and the contract for deed is I really own the house? The seller is only like a bank in regards to the house correct? What is the typical down payment expected for a contract for deed and interest rate? 8%? $3,000 down?
Any way, I am thinking of offering 2 or 3 options to the seller.
The reason for selling: The husband is a truck driver and wants to wife to be on the road with him now so they are selling the house. I asked the lady when she wanted it sold by and she said she was in no hurry. Unfortunate for me. Therefore, I am not sure if they will come down close to the $30,000 mark but it may still be a good deal at $35,000.
Offer #1) $30,000 cash. (I am getting ready to refinance another property which is where I plan to get the $30,000 cash)
Offer 2) Contract for deed ($32,500) $3,000 down, 8% interest for 15 years. monthy P&I ~$306
Offer 3) Lease with Option to Purchase (1 year term, with right to renew 3 times) $2,000 down, Purchase price $35,000)
Could you experts take a look at this and put forth any suggestions you may have. I know there is another investor in this area that will snatch this house up as soon as he finds out about it. Or he will tie it up in a lease purchase.