Suggestions for possible deal… - Posted by Scott (ATL)
Posted by Scott (ATL) on March 22, 1999 at 14:43:38:
I think my last post was a little long winded so I didn?t receive any replies. Anyway, I have a few more specific questions that should elicit a reply or two.
I?m interested in buying a friends condo (1953 2 bd/2b upgraded kitchen and baths, hardwood floors) for investment purposes.
I?m still getting some background info but essentially they have only owned it for a year so they want to avoid the capital gains tax. Currently comparable condos are available for 147K. I believe that they have increased about 10% which would put them at a purchase price of about 135K-137K a year ago. I?m not sure how much they put down but I?m guessing 13K for sake of argument (I?m working on these details?He?s a good friend of 17 years but he is hesitant to give this info?Doesn?t fully understand I think?Plus he?s a conservative accountant).
The way I look at it is if they list it and go the conventional route they?ll drop 10% in commissions and closing costs only allowing them to recoup their down payment. Then, of course, there is the tax hit! I?m not sure how much that would cost them.
Anyway, I?m thinking about asking them to take a second for their equity (Gets them the cash they need for their new house) and then offering them a lease option. This way they can hold onto the house for another year avoiding the tax hit and be guaranteed a sale with no sales commissions. I believe I?ll be able to get 1K-1200 a month for rent. (Preliminary SWAG numbers show this as break even)
Is my thinking going in the right direction? I?m sure we can negotiate a good option contract.