Posted by ScottE on May 29, 2000 at 09:53:16:
Not that Bud needs me to defend him, but it would probably be best not to alienate yourself with stupid comments like yours directed at folks with much more experience than you.
Bud has demonstrated that he knows what he is talking about and his responses are thoughful and cautious.
Keep the sarcastic remarks to yourself.
Scott
Is this a good deal? - Posted by Mike R.
Posted by Mike R. on May 28, 2000 at 14:07:22:
I am yet another one of those broke poor credit individuals who wants to get into REI. I’ll probably be able to make my rent this month, but dam, I’m tired of watching my rent money go into a landloards pocket and build his equity too boot… My current landloard has offered to sell me the house which I have been living in and he has even offered to carry the financing since my credit is so poor. The home is divided into two seperate appartments, 1 upstairs, 1 basement. Both already have seperate electric, cable, phone, mail, and fenced yards. They share common gas and water. The rents in this neiborhood for similar duplex type homes run about 800 to 900 a month and as long as I have been here this place has never been unoccupied, the location is great. The landloard has a couple of conditions that may be deal killers. 1 he wants a sizeable downpayment (though he may be somewhat flexible on that) 2) Loan at 11% 3) He doesn’t want me to refinance due to tax concerns. He is an elderly gentleman with several rental properties already and certianly doesn’t need the cash, he’s already made his million. I have done a great deal of work to the home(covered the back pourch, fixed up and added a bedroom to the downstairs. I had planned on moving when my current lease expired on 8/5, but he wants me to stay. He’s even evicting the family that moved in upstairs last august to get me to stay. They have 4 kids under the age of six and the noise has gotten intollerable. what I need to know is do you belive this a good prospect for purchase through whatever means, and how would I go about satisfieing his needs if so. I belive his asking price is currently in the $180000 to $190000 range with 10 to 15 thousand down. current rents here are $750 for down stairs and $800 for the uppstairs. Not sure on the taxes.
All replys welcome
I like Wendy’s - Posted by Bud Branstetter
Posted by Bud Branstetter on May 28, 2000 at 17:05:38:
His interest rate, large down, and probably FMV are signs of an unmotivated seller. The alternative is to option or L/O from him. You manage the place, get generous rent credits, lock in todays price and solve his problems. Then when the opportunity presents itself you sell to someone your interest that makes sense. The name of the game is control without owning.
this isn’t burger king - Posted by RR Smith
Posted by RR Smith on May 28, 2000 at 16:44:55:
Tell that smuck that you are offering him $160K with terms arranged by the bank (5% down)and this ain’t burger king, subject to inspection and financing. Oh, and then move out to a better SFH or DUPLEX.
not a magic wand - Posted by RR Smith
Posted by RR Smith on May 28, 2000 at 23:35:50:
Lease option a bad deal? Let’s see you need to streamline refinance, you need to tie up lots of cash and solve his other problems (there will be lots). Yes lease option is the way to go (but not this deal)on a GOOD (excellent) deal. I can’t see L/Options (and your time and effort) as a magic wand that makes poor/bad deals into good. But i could be wrong…maybe you have a really good mortgage person lined up and “generous rent credits” are $5-600 per month, maybe the price will keep skyrocketing and just maybe pigs will learn to fly.
Pigs may fly - Posted by Bud Branstetter
Posted by Bud Branstetter on May 29, 2000 at 12:53:41:
Robert,
Just like your comment about this isn’t Burger King and I like Wendy’s, different people have different tastes. Same in real estate. A Joe Kaiser tries to “qualify” the people before going to negotiate. The Homevester guy offers a lowball offer that the majority reject. Because he makes so many offers from his advertising he does numerous deals. Mike was pointing out that the guy did not need the money and I feel would reject a lower cash offer. I was trying to give an alternative that might work. If the guy doesn’t want the hassle of management or maintenance Mike may be able to make a deal. He is living there already and putting in a good tenant would be advantagous to him. Whether he can get enough rent credits to bring down the price we don’t know. That is one of the problems with this type of forum. It is difficult to know the abilities of the buyer and more difficult to read the mind of a seller from second hand comments. All that can be done is offer suggestions.
The advantage of him L/Oing is that HE doesn’t need the cash now. There is little risk because he doesn’t put out cash. On the L/O or options I do, the price is locked in at todays price. Not every purchaser of real estate requires a 30% discount from FMV. Many feel that a cap rate or return on 12% is fine. Nobody can survive a rehab unless you get the big discount but there are other ways to make money.