Posted by Russ Sims on June 02, 1999 at 02:28:55:
Bob:
What would fair market rent be for the home? Look in the paper to see what comparable rents are or call a property management company and sweet talk them into giving you an estimated rental value (it helps if they perceive you may hire them to manage it). You need to know this in order to figure your monthly spread. Once you know your monthly spread (the difference between what you are paying and what you are taking in), you’ll be able to determine how much you can pay for the property.The bigger the spread, the more you can afford to pay for the property. Sounds like you may do okay at $140K (though try to go lower!). You can resale for,say, $165K and pocket $25K. And if you’re making a couple of hundred a month to boot on the spread, all the better.
You need to find what the very least the owner will take as a monthly lease payment. Once he tells you, ask if that is the very lowest he will go. Yesterday I saved myself $35 a month by asking that question (I know: big deal. But it ads up after 3 years!).
The seller has a lot of equity so the chances are good of him giving you a liberal purchase credit. If you’re gutsy, ask that the entire lease payment be credited towards purchase. He may laugh but then come back with a figure you can live with.
Not sure if I’ve helped. Hope so…
Russ