Re: Need Advice-How about this… - Posted by Glen SoCal
Posted by Glen SoCal on February 10, 2002 at 19:40:49:
There are disclosures you must make, but aside from that, what are you offering the seller? As one poster said, what does he need? Disclosure is less of a problem for you than finding what will motivate the seller enough for you to profit from this deal. Picking up steady rent checks doesn’t seem like a great burden, and for sure he knows about the mailbox, so there must be another motivation.
Disclose everything to everybody. Let the broker, seller, and agent know your interests.
Tell your broker that you will give him a percentage once you sell the property. I imagine he’d take 1 1/2% right? If you found the deal that’s all he’d get anyway unless you double-ended the deal I guess. And the agent your are working with wants a percentage also, right, there’s another 1 1/2%.
The only seller consideration I’ve heard so far is that he wants to give the tenant the first opportunity to buy the place. Also, he wants out. But if he gets out now, the tenant won’t have a chance to get her down payment together to buy the place.
So agree to buy yhe place now, and give the tenant an option to purchase later at a certain price.
What you’ll need to do is negotiate a low enough purchace price so that the rents will cover PITI and expenses plus a positive cash flow. If the tenant excercise their option, you’ll profit from the spread. If they don’t you can sell to another buyer for the same profit. Or hold on to the place, tenant is happy there and paying, right? And the option consideration would be paid by the seller in the form of a lower price to you.
It sounds like the seller may want his money though, and just get out. He may not want to finance you his equity and deed you the property subject to his 40k loan balance. But he might. You don’t know till you ask.
It may not be the driving to pick up rent checks that the seller detests, it may be the thought of driving to do maintanance on the property.
You don’t know until you ask. It is said over and over here, ‘what’s the seller’s motivation?’
And what is it that you offer? The seller may not be interested in any ‘creative techniques’ other than cash. He may not be motivated enough to sell you the property at 65% of value, or even 70%,or whatever it takes to make the deal work for YOU. And in the case that the seller has little immediate motivation, i.e. no reason to lower his price (if he did too much, the tenant may be able to afford it) you’ll be in the same position as the tenant.
Find out what the seller wants, let the broker and agent know what you are up to. The agent may say that they saw the deal first and isn’t interested in letting you have it in any shape or form. There will be other deals.
But in the meantime, don’t burn your bridges, but go for it if the way is clear. Good luck to you. Let us know how it turns out.
This all just my two cents. I haven’t been in your situation.