What would you offer? - Posted by Courtney

Posted by WCF(CA) on October 16, 2003 at 17:46:20:

I like your post Clair, make sense and simple.

so the lease option has couple components:
-pre-determined purchase price, pre-determined price for purchase to t/b
-rent credits
-length of the lease
-consideration fee to owner and from tenant

if the purchase price is low and the price to tenant buyer is high, then we can be flexible in terms or rent credits not exceedin your profit?

Thank you for your email, see you in chatroom :slight_smile:

-WCF(CA)

What would you offer? - Posted by Courtney

Posted by Courtney on October 16, 2003 at 09:00:43:

I am working on a lease/option. My first deal yeah! They are asking 109 (what the house is worth) and I don’t think I can get them to agree to more than a 2 year term. Considering the short term, if it was you? what would you offer?

Thanks,

Courtney

What would you offer?..Here are the details - Posted by Courtney

Posted by Courtney on October 17, 2003 at 07:26:28:

I think I can get them down to 99,900. 2 year term at most, but their payments are $850/mo, which is about what the rental market can bear. They want 3k down, but I’m gonna shoot for about 1k down which I’ll get from tennant buyer, and the area is appreciating at 5%. They owe 70k. They are investors who bought the house did some fix in up and now they own 3 places, plus building a new house, and this has been vacant for a few months.

I think I might even be able to get a rent credit of $300 out of the $850.

Sooooo, this is how the deal sits right now.

Purchase price $99,900
1-3k to owner (it’s listed through a realtor, and he want part of his commish)
$850/mo rent ( The most I could probably get on a positive cash flow is another $50-$100/mo.

2 year option at a resale price of $$114,900- 119,900

Does this make sense or should I try to low ball them on price with the same terms like $90k and I can always work up?

Does this deal even make sense or should I walk?

Courtney

Re: What would you offer? - Posted by Clair-MO

Posted by Clair-MO on October 16, 2003 at 16:05:42:

Courtney, I think you need to work on the numbers as well as to think about the area where the property is located is it an area appreciating or deprectiating? Why do the sellers want to full amount 109k and what are they going to do with the money? What are their needs not their wants? If you know what their need is then you have a way into negotiating a lower price. I would never pay their asking price. Why not see if they would be willing to reduced their asking price by 10% or 5%? Let see what is involved:
Asking price…$109,000
Reduced by 5% to 10%…10,900
Purchased Price…$99,900
Find a qualified tenant-
buyer to pay you as an
non-refundable option fee…5,000

Rental Payment per month…$650 from the tenant-buyer

Your lease payment to seller…$400 per month

Your positive cash flow from the tenant-buyer would be $250! I wouldn’t bother offering a credit towards the purchase price from either the seller or the tenant-buyer. Doing a 2 years lease option for yourself and do a 18 month lease option with your tenant-buyer. Does this make sense?

Re: What would you offer? - Posted by Clair-MO

Posted by Clair-MO on October 16, 2003 at 16:01:21:

Courtney, I think you need to work on the numbers as well as to think about the area where the property is located is it an area appreciating or deprectiating? Why do the sellers want to full amount 109k and what are they going to do with the money? What are their needs not their wants? If you know what their need is then you have a way into negotiating a lower price. I would never pay their asking price. Why not see if they would be willing to reduced their asking price by 10% or 5%? Let see what is involved:
Asking price…$109,000
Reduced by 5% to 10%…10,900
Purchased Price…$99,900
Find a qualified tenant-
buyer to pay you as an
non-refundable option fee…5,000

Rental Payment per month…$650 from the tenant-buyer

Your lease payment to seller…$400 per month

Your positive cash flow from the tenant-buyer would be $250! I wouldn’t bother offering a credit towards the purchase price from either the seller or the tenant-buyer. Does this make sense?

Re: What would you offer? - Posted by David B

Posted by David B on October 16, 2003 at 14:44:50:

I’m not fully experienced in lease options, but I think it would depend on the appreciation in your area. If you could put minimum down (say $3 or $4K), set up reasonable rent with a few hundred credited back toward the purchase, perhaps it could work. I think 3 years would work better. But it would allow you to gain control of the property and hold on for the appreciation and gain the rent credits. Have you discussed rent credit toward the purchase?

Re: What would you offer? - Posted by E.Eka

Posted by E.Eka on October 16, 2003 at 12:19:12:

We need more specifics.

Let me get this straight… - Posted by gerald(tx)

Posted by gerald(tx) on October 16, 2003 at 12:11:48:

Instead of getting the deed, you want to take the property on a lease option where you have no control? And they want full price for the house? And they are dictating the terms?

What would I offer? I would offer them my best wishes.

Then I would go find a motivated seller who wants out so badly that he will agree to my terms, my price, and my control structure.

I would walk - Posted by Joe Eckburg

Posted by Joe Eckburg on October 17, 2003 at 14:08:29:

Too skinney. Too many unknowns. Not a good choice for your first deal.

Joe.