Posted by Jim_NC on December 12, 1998 at 20:43:31:
The first thing I would find out about is why they are willing to sell the house so cheap. Are they desparate and just want out from under the payments? Or is the house really worth $210k? I would be leary of someone willing to sell their house for $58,000 below FMV. The second thing would be to check out the comp. rent in the area. Will you be able to rent the house for $1500 + ? I don’t know what area you are in but in our area all the rental homes are listed in the paper by area. If yours our then you could check and see what homes rent for in the area the house is in. I would also get a real estate attorney to help you with the deal. He/She will be able to tell you what to do to tie the deal up correctly in your state to protect yourself.
My first (gulp!) L/O, HELP!!! - Posted by aquanaut
Posted by aquanaut on December 12, 1998 at 19:56:25:
Hey everybody, thanks for this terrific site. I have been studying RE in all my spare time and done one deal, but never a lease option. So, here it is: I have a seller willing to l/o a home FMV = $210,000, asking $152,000. Needs cosmetic repairs of say $5000 ( I just talked to the seller via telephone for the first time and WILL need to verify ALL of my numbers. ) This being my first l/o and a home much more expensive than what I’ve previously been involved with, How can I do this deal and protect myself?
How can I determine if there is a market for me to sublet/option to? What do I need to watch out for? BTW, owners payments are $1500 p.i.t.i. The owners occupy the home presently, how can I get the repairs done and still get lead time to get a tenant/buyer? I plan on using Bronchick’s forms from his “Ultimate Collection” And will probably purchase a l/o course, but I’ll need to move fast if I am to get this deal. Like I said, I’m new to l/o and therefore nervous as h’ll. ANY and ALL advise is greatly appreciated. TIA
You can protect your self by not commiting money until you are sure of values and rentability. On the latter issue you are not really looking for a renter but someone that wants to buy. Look for the days on the market for this size house. There are areas of DFW that this is the entry level. There are other areas that it would be more than several times the entry level. This is not meant as discouragement but only that as you go beyond the norm you may need more time. For this price house you would want more than the 5K as option consideration. While you don’t say that you don’t have the cash I would discourage using it until the tenant/buyer is on board.
While action is required on good deals you must find out his motivation, true value, and property condition to determine if it is a L/O, option, contract for sale or even a straight purchase. Good luck in tieing it up.
Re: My first (gulp!) L/O, HELP!!! - Posted by PBoone
Posted by PBoone on December 12, 1998 at 20:59:29:
Sounds to me like a true “dont wanter” on behalf of the seller, but why is not mentioned in your article. I recommend you read in the “success stories” area of CREONLINE an article titled $5 = mortgage plus $30,000 profit. or I think that is the title but anyhow I would suggest following that lead main reason being a $1500 commitment per month is a big one.
Pat