L/O?? Advice on terms needed-HELP!!! - Posted by DB (WI)

Posted by DB (WI) on March 08, 1999 at 14:55:42:

I didn’t say I would pay more than FMV for it, just noting what the seller is currently asking.

There is a range for rents in any market, this guy is at the low end and appartently he is happy with it because he is covering PITI. He isn’t the greatest investor in the world, he wants to use the money from the sale to further pay down his mortgage. Few rentals are advertised in the paper in this area, most are rented by yard signs, so it can be tough to get a handle on how much the competition is charging.

Thanks for the response, just wanted to run it past the group if there was a way to make something out of it.

L/O?? Advice on terms needed-HELP!!! - Posted by DB (WI)

Posted by DB (WI) on March 08, 1999 at 14:02:11:

I have found a FSBO duplex in a nice part of town which needs nothing. Seller has had it listed for 4 months with little response from the market. Is willing to carry a 2nd, previously lived in the house and bought a new home 20 miles away. Doesn’t need cash now, basically just doesn’t want to deal with it anymore. One of the current tenants is looking for a single family home (not interested in a duplex) and I think seller is really pushing to be done with it so he doesn’t have to drive all the way into town to show it when they move. Is really hung up on getting asking price, which may be $1-2K more than FMV. Average appreciation in the area is 5% annually. I’m wondering if it would make sense for me to L/O this property to keep as a rental.

Asking $135,000, will take $130,000
Seller owes $115,000
Total rents $1,200 (should be 1300-1350)
Seller PITI $1,200 roughly

I have $2000 to throw in as lease consideration.

What terms for a L/O would you all look for, for this to make sense?

The ratio of purchase price to rents is not as good as what I would typically look for, but there are tons of improvements that have been made. I live only a few blocks away now, so there would be a great convenience factor to have it as a rental.

Re: L/O?? Advice on terms needed-HELP!!! - Posted by JohnK(CA)

Posted by JohnK(CA) on March 08, 1999 at 14:46:37:

Two questions come to mind.

  1. Why would you pay MORE than FMV for a property that no one has been interested in buying for 4 months?
  2. If the rents SHOULD be $1300-$1350 why aren’t they.

Is this your 1st investment Property?
This thing will eat you alive, if you aren’t careful.
Look at the numbers, then run away, fast!
Good luck