Is this deal to thin? Need Help from Pros (Long) - Posted by StewNE

Posted by PBoone on February 23, 2000 at 23:59:42:

Always use the lowest or actual rental amount when calculating.
Offer a 3 year triple net lease w/ a purchase option of 75K, $300 option up front and $200. rent credit per month. Lease amount $150 per month less than the current renters. Sounds like he may be having some problems with the tenants

Is this deal to thin? Need Help from Pros (Long) - Posted by StewNE

Posted by StewNE on February 23, 2000 at 22:47:34:

() parenthesis are negatives
Purchase Price $75,000.00
Cash Invested (Paint, Steps, DownPayment) $7,500.00
Rate and Loan Amount 9.00% $67,500.00
Scheduled Annual Rent $950.00per month $11,400.00
Vacancy Allowance $950.00
Net Rental Income $10,450.00
Operating Expenses (Disc Rent\Phone)/yr ($540.00)
Operating Repairs/yr ($1,000.00)
Property Taxes /yr ($1,185.96)
Insurance /yr ($312.00)
PMI /yr ($360.00)
Total ($3,397.96)
NOI before Mortgage Exp $7,052.04
Annual Interest 561 ($6,732.00)
Annual Cash Flow before Taxes (Must Be Positive) $320.04
Monthly Cash Flow $26.67
Depreciation ($2,727.27)
Tax Loss or Gain ($2,407.23)
Annual Tax Loss or Tax Due $674.03
After-tax cash flow $994.07
Cash-on-cash return (Need Double 1 year CD Rate) 13.25%
Projected one-year gain in value of sales prices 1.33% $1,000.00
Projected total after tax return for the first year $1,994.07
Percentage on Cash Invested 26.59%

Problem 1: My first problem is trying to get someone to pay 950 per month in a area where rents are about 750 to 900

Problem 2: The current owner is out-of-state and has the house up for sale with renters in it until September. (I see this as an opportunity because he has limited his market to investors that want to take on renters. He hasn’t told me what they are paying, but I think I have to honor their lease. Is that true?

Strategy: Assume the loan (The mother died and owned the house free and clear and deeded it to the daughter for 66000.) Give the owner 7.5K and sell it in a year for 90K However, I am not sure if it went thru probate. How can I make sure it did and the daughter has a clear and free title without doing a title search. By the way, the daughter is out of state and I am dealing with her brother. However, I plan on sending the pre-agreement directly to the sister.

Thanks to anyone who gets the far. I am going in to battle Saturday.

fixing past the average block value - Posted by RR Smith

Posted by RR Smith on February 24, 2000 at 05:00:14:

Point of diminishing returns?..~~~~~~??.. I read a whole book on REI when I was very young (and still in the Stock Market) the only (whole?) point of the book was very simple.
Don?t fix up past the average house on the block. This can be expressed as corollaries for renting, additions, rehabbing and purchasing. You are fighting the trend, you are trying to rent for MORE THAN THE AVERAGE rent.