Posted by Jay (MI) on July 10, 2003 at 10:37:52:
I owuld be concerned about trying to get $10k in non refundable option consideration. I think that you would be *lucky * to get $5k. Todays mortgage market is making it more and more difficult to find that kind of tenant buyer. Also, have you discussed the possibility of them actually paying you $400/mo? If they were paying $400/mo that would take your rent down to $800, and cash flow would be $400/mo.
The adjustments that I would make on the offer would be to adjust the selling price based upon the fair market value, if you have the comps, show them to the seller, how can they argue with that? Also, see how long they will let you extend the terms, have the option to take control of the property for up to 4 years if they will let you. Good luck on the $400/mo from the seller. I would start there and settle as high as $1,100 as most L/O home rents are almost 1% of the selling price (around here some people multiply by .0096) which would be $1,600 (with rent credit included).