Posted by ken on July 25, 2007 at 10:36:50:
An option can work,that way if the work that is done is not up to par you have no obligation or you could sign a contract that will close in spring,you might want to put in contract that property will be vacant at time of closing or you will get the non paying tenant
Option to purchase or buy outright? - Posted by Michael
Posted by Michael on July 25, 2007 at 08:57:31:
Hello, found a great property but the owner has a close friend that she would like to help out until next spring by allowing him to live in the house by doing repair work. She owns the house free and clear.
What is the best way to structure this transaction? I would like to secure my purchase, but not interested in buying it and renting to this guy as I will not cashflow (the seller can do that due to her circumstance). What if I were to structure an option to purchase in the spring of 2008 at the price we have negotiated? What should I watch out for.
Thanks in advance for your help, Michael
Re: Option to purchase or buy outright? - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 11:15:20:
The most important thing you should do is have your option recorded. That will cloud title if she tries to sell.
Make sure you get a option for at least a year, because tenants (especially ones staying for free tend to be very slow in moving out).
Get the house at today’s price, subject to apprasial at or before option period is up. That way if the property value goes down you can renegociate or get out of the deal.
Spell out everything to be included in the purchase contract such as house to be vacant and everything to be in working order, ect.
Lastly, do not put very much money into this deal. It sounds very shady and its too long to be considered a go use of your funds.