Posted by Craig (IL) on February 17, 2002 at 12:04:57:
If the owner has been waiting a year its because he’s not really motivated, just waiting for the right offer to come around, or he is very motivated getting nervous because the property hasn’t sold. In either case, you could check this out–it wouldn’t hurt to make an offer. You may be able to offer the seller something if you have skill with rehabbing and/or skill with managment. First, though, you have some things to think about and some questions to answer.
Consider these: 1) One bedroom units will forever have higher turnover rates with means more work for you and longer vacancy periods. (2) based on the price you stated this sounds like a low end property; low end properties attract low end clients, more problems collecting rents, runaway tenants, drug use, higher crime, tenants trashing their units, etc. Are you sure you want into this? 3. Your income figure is off; you need to do due diligence. First, make sure you know the going rental rate, and then figure no more than 75% of that as income. You need some room to cover unexpected costs. Also, check the title, zoning, and other local laws governing rentals.
Once you’ve done all this, and if you are sitll interested, you could offer to purchase it on a CFD/ Land Contract wtih him financing the entire pruchase price. Offer no money up front. Instead, offer to do the rehab work up front in lieu of a down payment. The purchase price shoud be no more than the FMV less rehab costs. Also, write the note so that monthly payments are deferred until after a reasonable time to compete the rehab.