Posted by Alex on March 05, 2006 at 20:52:57:
You have a pretty good deal as it is: built in equity of about $17k, built in financing. What more can you ask for? I would take this deal exactly as it is being offered to you. To take cash out, you can get a line of credit against the home either immediately upon possession or perhaps 1yr later, when equity will be even higher. This is a good deal, so don’t get too aggressive: you want a win-win situation and this is it already
Please advise! - Posted by Bryan in NE
Posted by Bryan in NE on March 02, 2006 at 10:23:02:
Since I am a newbie in REI, I would like you to offer your advice on what you would do on a home I can acquire.
The home just appraised for $132,000 and the owner is asking $115,000. He is willing to allow me to take over his payments of $966/mo. for an extended period of time until I close. I am going to offer him $105,000 with a 5 year lease with an option to buy.
How could I structure the financing so that I can get immediate cash out? With me being new to the business, I would like to invest money in signs, business cards, newspaper adds, fliers, etc. but have no cash or credit.
Thanks for any input and I wish everyone the best of luck on their investing!
Re: Please advise! - Posted by CHRIS IN FL
Posted by CHRIS IN FL on March 10, 2006 at 14:20:21:
BRYAN, DEAL IS OKAY, NOT GREAT. GETTING TO $105K WOULD MAKE A BIG DIFFERENCE. YOU DON’T GET MONEY FROM THE SELLER ON THIS ONE. YOU GET DEAL FROM THE SELLER WITH AS LITTLE MONEY OUT OF POCKET AS POSSIBLE. THEN, YOU LEASE OPTION IT TO A TENANT-BUYER FOR AS MUCH MONEY AS POSSIBLE, AND POCKET THE DIFFERENCE BETWEEN WHAT YOU PAID AND WHAT YOU COLLECT. IF CASH TIGHT, YOU MIGHT HAVE TO SCRAMBLE TO LINE UP A TENANT-BUYER BEFORE YOU EXECUTE LEASE-OPTION TO PURCHASE FROM SELLER. ALSO, IF NEW, YOU BETTER STUDY LEASE-OPTION INS & OUTS, AND LEARN HOW TO PROTECT YOURSELF BUYING AND SELLING. YOU WANT THE PAPERWORK DONE TO YOUR ADVANTAGE ON BOTH SIDES, WHICH REQUIRES A LOT OF KNOWLEDGE. CHARLES GAVE SOME GOOD BUYING ADVICE - A START. SELLING, YOU WANT LEASE AND “CONTRACT FOR OPTION” SEPARATE, SIGNED ON DIFFERENT DAYS, AND CONTRACT FOR OPTION CONDITIONAL ON LEASE TERMS BEING MET. IF YOU DON’T UNDERSTAND ALL OF THIS, AND THEN SOME, YOU DEFINITELY NEED TO GET SOME HELP WITH THE PAPERWORK END OF THINGS. GOOD LUCK!
Re: Please advise! - Posted by Charles Parrish
Posted by Charles Parrish on March 09, 2006 at 23:27:30:
You can not pull money from this deal since you do not have legal ownership; you only have an option to purchase.
Your profit margin is a little thin, but you could make it better.
I would suggest you engineer the contract where your seller will credit you back $100.00 month or more during the option period; the seller?s incentive is that you will pay all of maintenance, pay the increase in taxes and insurance during your lease and that you will make all payments as agreed.
Over the 5 years you could have a credit of $6,000 or more plus the principal reduction and any positive rent payments and appreciation.
When buying, I suggest have your option and lease in one document. Make sure you have the deed held in escrow. In five years, you may not be able to find the seller or he may change his mind. You will want to know where that deed is and how to get it recorded. Protect yourself.
That?s my opinion.
Charles