Posted by Glenn (FL) on February 02, 2002 at 10:12:51:
Good morning Gerry,
Why would you only have 3k after selling?..what commissions? did you have a realtor or attorney set this up? and if so, are you locked in?
just curious…
Glenn
Lease-option in Florida - Posted by Gerry Elrod
Posted by Gerry Elrod on February 02, 2002 at 10:03:24:
This is my first post and think I need some advice. I have a home in Pensacola, Florida that is currently being negotiated for a lease-option, which I’ve never done but have read about, and the girl who wants the house has decided not to lease if she can get approved for financing. See, she is self-employed and hasn’t been in business long enough to show any profit and has had trouble getting approval. So, I thought the lease-option was a done deal. Here is what I initailly offered her,
Sale Price $117,900
2-year option with $1,800 down at $1150.00 month’s rent
Here is what we agreed on,
Sale Price$117,900
2-year option with $1,200 down and $1025 month’s rent
Well, my current debt obligation on the house is $916/month including insurance and taxes. So, my monthly cash flow is only $109/month and I will have just a meager $3,000 profit after commissions and closing fees. Not much to show.
Although I have had decent appreciation on the home, I 100% financed it with a VA loan because it was my personal residence and had little money to put down. I bought it for $109,900 and added the VA funding fee to the mortgage (big mistake but I was short on up front cash remember)and after four years I still owe $107,000 on the mortgage. I had to move suddenly from Florida to Washington State and had the home rented with negative cash flow because of property mgt. fees and then I lost my tenants because of poor management and then the house sat empty for a year. A big blunder on my part, but I’m in the military and had to make decisions on this property from overseas at times. Luckily, I make enough at my day-time job to cover two mortgages, but who likes losing money?
There has to be a better way to structure this deal for a more lucrative outcome without scaring off buyers. I live five hours from the home now and have it with a realtor who is earning her 4% by getting people to look at the house, but I want to sell the house and start investing in my area. I just obtained a $220,000 line of credit with a local bank and am looking for my first real estate investment. I sent off for Alex Gurevich’s lease-option cashcow course and am looking forward to executing my business plan. Up until then, however, I need to pull some profits from my property in Florida.
Really Green Vesty in GA.
Re: Lease-option in Florida - Posted by Paul S
Posted by Paul S on February 02, 2002 at 12:19:55:
I sincerely hope you weren’t paying management fees for that whole year? Isn’t Pensacola a military town? How in the name of all that’s holy did you end up not renting out a house in Pensacola? Even a bad manager could have rented it for 2/3 of the going market and salvaged something from that whole year? Now you still owe for all practical purposes 100%, and you are willing to let someone walk with your property for $1,200? $109 doesn’t leave much room, so I’m thinking you are offering 0% credit? I think I’d get more of a down $. There’s a reason people can’t get financing- they are high risk. It’s one thing to not be able to prove income- it’s another not to actually have any. Better make sure. Does this person intend to sublease? What is their plan for getting financing? If they can’t come up with another $600 (to meet your original $1,800 down) how do they plan to come up with another $10,000 in just 2 years to get financing? Just a few questions to consider.