Here’s what I’d offer! - Posted by Jim
Posted by Jim on March 19, 2001 at 07:12:11:
If the house is in good condition and in a good area, I’d make a L/O offer.
But I’d want to reduce my risk with this deal. L/O for $12,000 + mortgage balance, at the time of sale; for the mortgage payments for 6 months with the right to renew for 9 terms. This way, you’ve reduced the term period to reduce your risk. If the deal goes sour, don’t renew!
As for the deposit, I’d tell them, ‘they already owe $830 in back payments and I need 2 months (after they vacate) before I’d start making payments, so I have time to find a ‘Good Tenant/Buyer’, they’ll owe another $830 plus legal fees at that time; the best I could do was $500. Can’t they see that I don’t make any money until I get a tenant/buyer to closing and I’d have a miserable time getting more from a tenant/buyer for a deposit. I’ve done this before and I’m just NOT willing to get into a trap. I do this for a profit and if they need more I can’t do it and they should call me if they change their minds. BUT the longer they wait, the more they owe, the fewer my options are and the less money I could give. etc. etc…’ If they just have to have more then we wouldn’t be talking about L/O but Land Contract or deeding ‘Subject to’.
If they went for a L/O and the area is appreciating as you say, I’d try to get $80,000 on a “rent to own” and shoot for $3,000 to $4,000 (5%) as a nonrefund deposit. This way, you’ve covered your up front cost and you get your cashflow right away. AND definatelly get a tenant/buyer who’s interested in a ‘Down Payment Assistance Program’ to increase your cash flow that much more. Even if all I get for a deposit is $2,000, if the tenant/buyer wants to kick in an extra $200 or $300/month towards their down payment, I do that in a NY minute. My cost would be covered in a couple of months and I’ve increased the cash flow several hundred dollars per month.
If they went for a Land Contract or deeding ‘Subject to’ then I’d wrap that baby and sell with ‘No Qualifying Loan’ for $85,000 with 10%+ down plus 1/2 closing cost. Oh, the best I give the sellers is $5,000 minus what they owe in back payments minus 1/2 closing cost.
Of course, this is just me…
I don’t know the particulars or the owners. This is just quickly off the top of my head.