Possible Deal…NEED ADVICE - Posted by Julio
Posted by Julio on November 22, 2000 at 21:31:36:
Ok, here it goes. A single family (3bd, 1 ba)in a college and hospital area, FSBO. Seller stated that he may help with closing costs which meant he was willing to pay for a point ($800-900). The home was initially on the market for $85,000 but has been lowered to $81,000. It was appraised at $85,000 2 yrs ago when they refinanced. I saw the home today, it is in immaculate shape and actually listed in the top 5% as energy efficient (seller showed me the documentation). The seller is flexible, however, he has a mortgage on it for $77,000 (non-assumable), ($660/mo including taxes and ins). I proposed two scenarios, a L/O or a seller financing deal.
Scenario 1: (L/O)
The seller just bought land to have a new house built on it. The house will be built in the spring (2001) and completed by late summer early fall. They would do a lease option, if, they are allowed to stay in the home as tenants until they move to their new home. How would this work to my benefit as far as helping me with some down payment money? How can I structure this to benefit me considering the lease option may only be a year long? Can I charge the owners/tenants rent higher than their mortgage payment to a)cover any expenses, b) future down payment.
The seller would raise the selling price to $85,000. They take, let’s say 7,000-10,000 as a second mortgage and I get a mortgage for let’s say $75000-77,000. In this deal I would get a little money down deal but I’m not sure if I would get negative cash flow. The taxes on the property are about $1,200/year and insurance around $350.
I figure that for that area I could probably get around $800-1000/mo for rent depending on whether they are 3-4 college students or resident doctors, which are desperately looking for housing.
So any advice would be greatly appreciated. Also, if you think this is one to just walk away from PLEASE let me know!!