Posted by TroyT on September 24, 2003 at 21:25:53:
Why not just use a Straight Option? Get it tied up for $82K, see if you can get away with less for Option Consideration, like $1. If you do go with $1500 make sure its Non-Refundable. I wouldn’t put your own money at risk on this deal.
Yes, and then flip it. With this kind of spread you could even list it with a Realtor to sell, they make their 6% or whatever. Once you have the Option you have control over the deal and operate as the Seller. I think 90 days is a good time-frame here.
As fellow investors, maybe you could give me some advice on this deal…
Property consists of
3 lots all w road frontage (4+ acres total)
1 lot= raw land (buildable)(1.5ac)
1 lot= trailer in need of tlc-freeze damage(1.5ac)
1 lot= trailer w 2 car garage currently rented @$550
The seller is an older lady, widowed, looking to cash out. Her price has fluctuated recently from 78-84k. The seller has expressed an interest in selling, although this property is not listed with a realtor, nor is it being advertised at all.
This is my dilemma.
I know this property will bring at least $105k. I need to make an attractive offer. I’m not able to secure financing, so, this is my plan.
Offer a L/O at $82k with $1500 cash as option consideration. Tie it up for 90 days and either flip it or try to secure $82k.
Is this my best bet?
Posted by TroyT on September 26, 2003 at 06:00:59:
You got it Peter. Build into your Option Contract all the flexibility you want. If she adds buildings, then have her prove it with receipts, if that’s what you want. You could even write in that you’ll only value the additions she does at 75% of the cost (just for example).
With the Option you also have the power to make other improvements to the property. You could get the power in you option to have it rezoned, surveyed, etc., during your option period.
Essentially, whatever you want to negotiate into the Option Contract you can do provided it is within local by-laws. I’d get as much flexibility as you can. Make sure that you specify the ability to list it with a Realtor (this is just for extra protection), the ability to show buyers the property, to get inspections done.
Re: What to offer the seller? - Posted by Brent_IL
Posted by Brent_IL on September 24, 2003 at 22:24:00:
I agree with Troy, $1,500 is too much for someone who is only considering selling. When she’s in the $78K mind frame, offer $100 for the 90-day option at $80,000. Ask for 180 days and fall back, if needed. Talk about the hassle of selling three separate lots even if that is not your ultimate strategy.