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hello all,
looking for some input on some negotiation options/offers on a property i looked at today, a 1900 sq.ft. 3br 2 bath , 2 car carport, no liens on property ,owner inherited from parents when they passed. owner tried ” rent to own” to there caretaker but she couldn’t afford and had to move.
nice house in an older well established neighborhood would rent for around $750 to $850 monthly has a tax value of $96,000 but i put the value at around $78,000.
had a pleasant conversation with the owner bounced some ideas around and at this point i know he would take $55,000 and possible a little less and do some owner financing for around 36 months.I guess i’m looking for some help in presenting an Offer . I want to become very proficient in buying properties in “Trust and using Options with or without Leases”
looking for input from the experienced negotiators
Thanks
RickyRicky,
I would make several offers. First off need more information. What are taxes and will they stay the same for a non owner occupant? What is insurance? What will it rent for $750 or $850? Does the place need any repairs and what are the costs?
Need this information for a lease or term offer. Are their other heirs involved?
One idea before the info comes in is a highest bidder sale. Could do for terms or cash. I think I would try if all cash spit over 50K.
Don Wede
Thanks for your input Don,
taxes = $1100 year , insurance $600 year . no other heirs involved. should rent for $800
minimum of work needed, has new a/c refrig. may need new stove has older one.. past tenant pulled up carpet and has hard wood which is in good condition, may need carpet in one of the bedrooms where the hard wood isn’t in good condition.. and maybe some paint on BR walls id put repairs cost at $3000 all cosmetic..Thanks
RickyRicky,
If the owner truly wants to be out of the loop in 36 months I would do a lease with an option to buy rather than seller carry. I don’t recommend balloons. How about this? Separate lease separate option in two different names or entities. Strike price of 50K any time in the next 36 months. Get a right to extend after 36months. What ever you can agree upon rent try to get as much credited as additional option consideration towards purchase. Find a good end user and sublease to them at a higher payment. Also give them an option to purchase in the next 36 months. Do not give them any credits towards purchase to avoid Dodd Frank. Use a straight option. You will have to be selective in the end tenant/buyer since they will need to cash out at the end. Of course your strike price to the end buyer will be something over your 50K price. If there only problem is or will be down payment you can fix that now or later buy buying an option from them at the close for some or all of the down payment needs.
Don Wede
That sounds good Don ,I had similar thoughts ,
why the 2 different entities on the Lease and Option , is it so they want look like they relate to each other, and should the Option or the Lease refer to each other…
I had mentioned $500 guaranteed monthly to him and he frowned upon that until I mentioned it would be guaranteed rent each month and he would not have to do any maint. or repairs,
I could see his thinker going off.. and possibly considering that , altho at that rent payment I wasn’t asking for any rent credits ,If I had to pay closer to market rent then I would want rent credits .Is there any specific Lease / Option forms on this site I would use.
Ricky
Ricky,
Two entities is how I have been taught by Jack, Jimmy, John. Not in all cases but I think for sure one this with Dodd Frank looming out there. I do almost everything in land trusts. In that case I have the beneficiary sign the lease and the trustee sign the option. The only reference I would make is a default in the lease would be a default in the option. There are a number of leases and options in the “file vault” on CFD.Even with the reduced price, you should consider that the property could be worth LESS in 3 years.
So, make sure you write in the right to extend your option for another 3 years. You might offer to pay $1000 for the extension and another 3 years for another extension payment.
Your real estate market is at the top now so it may be a good time to take the money and run…. using a Highest Bidder Sale to bid the sales price up.
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