PLEASE HELP!!! - IS THIS A GOOD DEAL - I THINK SO. - Posted by Joey M Powell


#1

Posted by Stacy (AZ) on December 13, 1998 at 18:05:59:

Joey-

(I would feel strange calling you JP)

Why not let the marketplace help you decide to do this deal or not. If you place an ad, asap, and guage the replies, you’ll know if there’s interest or not.

WON’T LAST! RENT TO OWN!
Beautiful 3Br 2Ba home near
3rd St. and Central. Great
Neighborhood! $825 month,
you own in 3 years! 555-1212

You may even find a buyer before you tie it up. Your friend will probably be OK with letting you test the waters. If the phone doesn’t ring, pass this one by.

Stacy


#2

PLEASE HELP!!! - IS THIS A GOOD DEAL - I THINK SO. - Posted by Joey M Powell

Posted by Joey M Powell on December 13, 1998 at 16:24:50:

Okay guys, I have heard all the talk about how profitable lease/purchases can be. You know, you tie up the SFH and get “control” of it, then you sell into a “sandwich,” do a simultaneous close two or three years later, and put the extra money into your pocket. Sounds great, right? I think so, too.

Okay, now I have a deal that I have been able to do with a friend of mine. He was transfered out of state (with his job,) and now his beautiful home in a great neighborhood has become a problem for him. He has tried to sell (while living in it) for the past year with no success. He told me that the realtors showed it constantly, but the home just never sold. Here’s a little more background on the home. He has an appraisal on the home (OCT 1 1998) at 88,500.00 (keep in mind - great home, great neighborhood,) and he has just re-financed it with a note for 72,500. His mortgage payments are about 550.00 monthly, and the fair market rental amount on the house (according to two property management firms in the area) is 675.00 - 700.00 monthly. I approached him with this deal:

I offered to lease the home from him with an option to purchase, with the following conditions:

Term : 3.5 Years
Monthly Lease Amount : 575.00 (with 225.00 monthly credit)
Option Sell Price : 80,000 (80,000 less accum. credits)
Option Consideration : 575.00 (creditable and w/1 mo. lead)

I also told him that I would assume all on-site management responsibilities, and I agreed to pay all maintenance costs up to 100.00 monthly.

If you do the math on this, you can quickly see that my basis after three years would allow me to purchase the home then for about 69,000.00, while an appraisal should show it worth between 90,000.00 and 95,000.00.

Everything great, right? Now, my problem. I don’t have very much money at all. In fact, I don’t even have the 575.00 that I am supposed to give him (yes, he has agreed to the deal) in two weeks (DEC 24.) I am also very concerned about being able to lease the home - what if I have to come up with 2 or 3 payments on my own?

Realizing this, I spoke to an investor friend of mine about possibly partnering with me on the deal. He thought about for a little while and then told me that houses in that city are not renting fast right now (he added that there appears to be some saturation of rental houses in the market.) I really don’t think it would be that hard to rent the house, though. There is a military base only 5 miles from it and the town is of fair size, about 20-25,000 people. Still, I can not help but be very concerned. I have never done anything like this before. I have to make a decision to go through with the deal or not to. I really think that I should, though. Would any of you guys mind telling me what you think?

Thanks,
JP


#3

Re: Follow-up? - Posted by Stacy (AZ)

Posted by Stacy (AZ) on December 15, 1998 at 15:40:50:

Joey, how’s it going? Keep us posted.

Stacy


#4

Re: PLEASE HELP!!! - Posted by John(NH)

Posted by John(NH) on December 14, 1998 at 10:52:11:

Joey,

With those numbers and terms it will be hard to

go wrong. Like Stacy mentioned, see if you can get a

buyer before the 24th. If you can get $1500 (or more)

option money, that will cover the $575 you give to

the seller. Put an ad in and see what happens. If you

need more time chances are the seller will give it

to you based on his situation…

-John