What would you do? (another one) - Posted by Nathan

Posted by Jack/TCG on March 03, 2001 at 20:52:29:

I do want the FMV, but NOT the price the owner thinks it’s worth. The appraisal should be the evaluation of the fair market value of the property by an expert appraiser. That’s the TRUE FMV. Which usually differs with what a Seller believes it should be. —Jack

What would you do? (another one) - Posted by Nathan

Posted by Nathan on March 03, 2001 at 19:19:24:

I found a seller that has a 4 plex for sale @ $105,000. Its a fixer upper. Rents all add up to $1600 a month there is $800 in deposits.(200 for each) Sellers payments for the place add up to exactly $1600 a month. I have not estimated repairs and I dont think rents can be raised. I have already got the seller to agree to a lease/option @ $1600 a month with a down payment of $2500 up front and $2500 in repairs. The seller would give me $5000 a year ($416.66 per month) credit towards the purchase price and he said I could have it on a lease/option for as long as I want or until I pay it off. I have done a walk through of the place and from what I can see it is not a total dump but could use some cosmetic repairs mainly paint (inside and out) and carpet. I have no money and no credit. The seller seems pretty flexible.

My questions are:

  1. Should I do this deal? If yes, how?

  2. Can I use rents ($1600) and deposits($800) for a down payment(option consideration)?

  3. How can I give the seller some security that I will do $2500 in repairs?

  4. How long should I lease/option it? Can I do it until I pay it off?

  5. Is there enough money in it for me to do this deal? I think the place would be worth more than 105,000 with repairs done.

  6. Do you think the seller would go for me using the first months rent and deposit. To make it sound better should I tell him that it wont apply to the purchase price?

Can anyone help me? Details and numbers would be great.

Re: What would you do? (another one) - Posted by Jack/TCG

Posted by Jack/TCG on March 03, 2001 at 20:46:58:

Hello Nathan,

What is it appraised at? Not FMV (fair market value), but the actual value on appraisal?

If it’s appraised higher than the Seller is asking, or, if it would be worth more (by comparable pricing in the area), then I can tell you how you might be able to get it, and put money in your pocket at closing. It won’t cost you anything but what it takes to bind the Purchase Contract.

Also, is there an existing mortgage against the property? Taxes run how much a year? Insurance? Etc.

Would the Seller be willing to give you a first mortgage at 65% of LTV (loan to value), and then be willing to sell the first mortgage at closing for a discount? However, he/she (the Seller) would not be losing any money, and is why you need heavy equity on your end, so that you make out on this type of deal. I’ll explain it more fully if the figures are right.

If you have that info, I’ll explain the process. But friend, you need heavy equity on your end. If doing a little rehabbing after purchase would raise the value considerably (depending on comps for the area it’s located in), then the method would be worth consideration.

Here’s an attached form to evaluate the property with, and go here for Calculators Galore :slight_smile:

Talk at you another time :slight_smile: —Jack



Name of property:______________________________

Age of property:_______________________________


Type of property:______________________________

Area it’s in: (Nice, or otherwise)_____________

List price: $__________________________________

Appraised value: $_____________________________

Cash required: $_______________________________

Existing assumable financing: 1st Lien Amount: $_______
Annual payment: $_______
Interest: _______%
How many years does the lien have left? _______

Existing assumable financing: 2nd Lien amount: $_______
Annual payment: $_______
Interest: _______%
How many years does the lien have left? _______

Existing assumable financing: 3rd Lien amount: $_______
Annual payment: $_______
Interest: _______%
How many years does the lien have left? _______

Potential financing:1st Lien amount: $_______
Annual payment: $_______
Interest: _______%

Potential financing:2nd Lien amount: $_______
Annual payment: $_______
Interest: _______%

Potential financing:3rd Lien amount: $_______
Annual payment: $_______
Interest: _______%

Scheduled gross income: $_______
Less vacancy and credit loss: %
LV & CL amounts to: $

Gross Operating Income: $_______

Less Operating Expenses:
Taxes: $_______
Insurance: $_______
Utilities: $_______
Advertising: $_______
Licenses and Permits: $_______
Management: $_______
Payroll: $_______
Payroll Taxes: $_______
Supplies: $_______
Services (lawn service, trash pick-up, etc): $_______
Maintenance: $_______
Reserve for replacement costs: $_______
Ground lease: $_______
Anything additional:__________________: $
__________________: $
__________________: $
__________________: $
__________________: $
__________________: $
_______________: $
: $
Total expenses: % $
Operating income: $

Other related income: $

Net operating income: $

Income adjusted to financing (Check one):
Equity: $_______

Net operating income: $_______
Less loan payment on first loan:
First loan interest: $_______
First loan principal: $_______
Total first loan payment: $_______

Less loan payment on second loan:
Second loan interest: $_______
Second loan principal: $_______
Total of second loan payment: $_______

Less loan payment on third loan:
third loan interest: $_______
third loan principal: $_______
Total of third loan payment: $_______

Gross spendable income:
Rate: %
Gross spendable income equity: $

Plus principal payment: $

Gross equity income:
Rate: _%
Gross equity income equity: $

Less depreciation:
Personal property: $_______
Improvements: $_______

Real estate taxable income: $_______


Number of divided units:


Square Feet:




Utility Room:

A/C System(s):

Heat System(s):




Unit Descriptions:

Rent per each Unit: $
: $
: $
: $
: $

Building constructed of:



Size of lawn area:

What about this one ? - Posted by Nathan

Posted by Nathan on March 04, 2001 at 15:36:09:

I found a 5 unit apartment building with 1 bedroom in each apartment with a store in the front. 3000sq.ft of apartments 1000sq.ft of store. Coin laundry that makes about $100 a month. Rents all ad up to $1375 per month. I think there would be room to raise the rent for the store since they only pay $275 per month. His asking price is $79,500. He has a non assumable loan on the place for $20,000 which he pays $329.64 per month. There is a balloon payment due in 2004 to pay it off. He is willing to take a second for his equity of $59,500. I asked him about a possible lease/option and he said he was open. How should I work this deal?

I was thinking that mabe I should try to get it on a lease/option until the balloon is due in 2004. Then try to find financing to pay off the $20,000 and give the seller a 1st for his equity. Or mabe I could sell it for a profit before my option would expire. Now if I can get it on a lease/option there is $1375 in rents every month and the owner only pays $329 should I pay more for rent every month and just build credits toward the purchase price or should I try to pay less for rent and put some money in my pocket every month? The seller seems pretty flexible. He lives in Oregon and the property is in Washington

You know how the story goes. I have no money or credit bla, bla, bla. What would you do?

Anything will help. Than you!