Posted by Kent C on February 22, 2002 at 01:38:07:
Oh, Id ask for 6% but pay as much as 10%. As far as the balloon in 3-5 years it is based on the convergence of equity gain + market value gain vs the cost of refi + payoff of 2nd mortgage.
Buying at 80% FMV means you will have enough equity and (hopefully) market gain to be able to refi in a very short time (2-3 years perhaps) and be able to cover the cost of refi and pay off the 2nd. Something I might say here is my “deal” price is as HIGH as I would go. If you have not shown any numbers yet, bid less. They will not likely take much less than the values I mentioned because they have income from this place. There are probably not very hungry, they see value in it. Ya never know but just my opinion.
This IS a rather skinney deal.
But if this is a first deal or one of the first. It will do to get your feet wet. Even if you break even it will teach you things. With every deal, never stop asking “What could have been done better…what worse?” Never stop asking yourself this.
Why, after a few short years you may even be talking to yourself…then answering yourself…renters excuses can make ya crazy.
I’m looking at a deal here where the seller has listed her condo with a realtor.
Seller asking price for 1/1 condo is 35K (FMV is about this price). The unit
currently has tenants until Jan/2003 paying $500.00/month. HOA is $157.00/month.
Tax is approx. $80.00/month
Please look at the 2 offers and let me know if any will work and would appreciate
if you can advise me a better offer or else should I just walk away.
OFFER #1 - CONV
Offer price: 28K
Down : 5,600 (20%)
Loan int : 9%
Seller pays closing cost
Seller buys home warranty
Re: Please look if any of these 2 offers will work - Posted by Kent C
Posted by Kent C on February 21, 2002 at 02:52:49:
I seem to get my best deals on the ones I dont care about. On those type deals I grow enuf hair on my chest to throw a real low ball at em. I dont know if its my attitude when I do this or luck but they usually get accepted. When I know it is a great deal and I low ball I dont do as well.
This is not a great deal. But I smell a 50% chance at a reasonably good deal.
Your financial situation is key here. If you have money for a 20% down, offer $25k, they pay realtor and closing. If you dont, offer $28k (they pay realtor and closing) but they hold a 20% 2nd based on a 10 yr payout but balloons in 3-5 years (depends on future ability to pay off).
Pmnts are about $300/mo, the 200/mo cash flow is really only about $50/mo after expenses (trust me here).
This, as in any highly leveraged rental deal, is your basic rental game. Work for 15 years without pay but in the end you have asset. It is not a cashflow game. It is a hope-to-break-even game. It is a retirement investment. Is it worth working for 15 yrs for no up front money? SURE. Just know what game you are really playing. A retirement investment. Do NOT expect to live off of it (until retirement).
Re: Please look if any of these 2 offers will work - Posted by Michigan Andy
Posted by Michigan Andy on February 20, 2002 at 18:47:53:
BoY-
Offer #1 is way too skinny for me. Your positive cash flow per month is $82.76, before any maintenance and potential vacancy. At that rate, it would take you over 5 1/2 years to recoup your initial investment. Pass.
Offer #2: Where does the realtor get paid? Most realtors in my area work on a $2k minimum commission. Your offer does not cut the mustard there. Correct me if I’m wrong, L/O afficianadoes, but the idea with a L/O is getting paid on the three profit centers: Upfront non-refundable option deposit, monthly spread, and when the T/B cashes you out, you get the difference between the purchase and sale price. The way you explained things, you get only the spread ($25/month) and maybe, after 10 months goes by, and you try to find a T/B that will bring you the first and third profit center. If it were me, I’d put my grand to a better use for the next ten months. Pass for me. There are more deals out there than I will ever do in one lifetime.