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Hi, Everyone, I am a new member here and learning from you.
I have bought houses in Tampa Bay area, FL.
Here is a house that I want to offer to buy.
The owner is in China and has never come here. Paid the house at $75,000 in 2015. The current rent is $1000 with management company and the owner gets $800 with handsfree cost which means the owner not pay taxes and reparis (don’t ask me why like this). The house condition is livable with old roof, AC… a lot delayed repairs. The owner right now either wants to sell it or want me to manage it.
Here are some numbers:
The owner wants to sell it more than $100, 000 with AS-IS. or want me to manage it and receives the same deal.
The market AS IS price is around $100,000 and with some repairs and upgrades around $120,000.What I’d like to offer is seller financing terms or Master lease with at least 15% net rent.
Any idea and suggestion on how to offer the deal to the owner? thank you all.
Ling
First of all, when you do a master lease, it is better not to mention a % of rent. Use hard numbers. If you use a % it sounds more like a management company.
Honestly, I don’t see any reason at all to buy this house. There is not enough meat on the bones!
I’d consider doing a master lease but with all the deferred maintenance, that does not sound like a good idea unless the seller agrees to no payments for a year so the house can be fixed up.
A better way to deal with this property would be to get an OPTION for as little as possible – $80,000 max, Negotiate seller financing terms with no balloon preferred. . Then do a highest bidder sale for the highest down payment. You could probably sell to a retail buyer at $100,000. Perhaps get $10,000 down. It would be hard to get more down because the buyer needs cash to fix up the house. But if you negotiate good terms with seller financing, you could get a nice monthly cash flow with NO MANAGEMENT or LIABILITY. You could put a 2 or 3 year balloon on the buyer’s note so you’d get cashed out later. But if the market tanks, you might get the house back, then you could sell it again or just keep it as a rental
It’s a skinny deal.
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