Posted by DavePA on March 04, 2002 at 18:27:29:
Why don’t you ask the owner if they will finance the property 100%?
Tell them that you will give them a better return for their money than a bank cd would.
I still wouldn’t pay FMV.
Good Luck, dave
Is anybody doing this? - Posted by Fletch
Posted by Fletch on March 04, 2002 at 17:23:16:
I own a nice little 3 bd/2 ba cape cod in a nice little neighborhood. There is another one just like it FSBO down the street from me.
The owner said that they wanted 125k which is probably full market value. She said that she thought about renting it out, but she didn’t know anything about landlording.
I see a potential for cash flow if I can get the owner to lease the property to me at below market rental rates then sublease it to someone else and keep the difference. I think maybe this is similar to what happens in a lease/ option(which I have very little knowledge about)minus the option.
I guess the trick is getting enough margin to make the property management worth the effort, and convincing the owner to lease the property to me with provisions for sub-leasing.
If anybody has any ideas or recommended reading please let me know.
thanks,
Fletch
Re: Is anybody doing this? - Posted by Brent_IL
Posted by Brent_IL on March 06, 2002 at 06:02:41:
One successful leasing approach to a hands-off landlord is to offer to pay the monthly rent in advance for a slight discount. You can offer to take care of routine maintenance expenditures up to $100 per month to ease their management anxiety.
Try to use a number at the low part of the rental range. It’s more palatable for the owner to discount annual payments with a right to renew for several years than for them to accept the hit on a multi-year long term lease.
If the owner is thinking that you can rent the house for $1,000 a month, you might offer to pay them $10,000 up-front for a one year lease starting in 30 to 60 days so you have a rent-up period. Split the $10K into rent and an option consideration if you want any appreciation. Your ROI is 35%+ annually. If you can do 6 months for 5, it’s even better.
You have to locate a long-term renter on a month-to month lease (MTM, so you don’t get stuck).
I think it’s safer to have a third-party pay the bills so your tenant doesn’t get any surprises, such as no heat.
If you want to verify expenses, you can work with the owner?s net profit to determine a lump sum payment and then triple-net the property.
Use your own paperwork.
Re: Is anybody doing this? - Posted by Mark
Posted by Mark on March 04, 2002 at 20:51:09:
You can pay the full market value if you can get a rent for the place which will exceed the payments to the bank, etc… Research the rentals for like units , and make sure the area is hot. This will ensure a quick rental. plus if the area is hot prices will go up. So what is fair market today, may be a bargain tomorrow! Dont pass somthing up if it will create money for you.
Re: Is anybody doing this? - Posted by JoeS
Posted by JoeS on March 04, 2002 at 18:54:09:
What is the appreciation rate in your neighborhood? I would have to agree with Dave…buy it for 100K, 1K down, 10% interest over 30 years, put in a 5 year balloon if you have to. Rent it out for a year, sell it for 125K! You could probably sell it to a lease tenant/buyer. Claude Diamond is the pro at this.