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Hey CFD community – spoke with an owner / seller about her property.
She owes $80k and it’s worth ~$230k. I think the rents are ~$1400.
She is considering selling but has considered doing rentals – but she doesn’t want the hassle of being a landlord.
I proposed a Master Lease agreement where I would rent from her and re-rent it but take on the hassle of finding tenants, collecting payments, etc. and this way – she still owns the house, is making on time payments and paying down her mortgage.
Seems very interested in this proposal and I’m meeting with her Friday.
Any thoughts I should consider when negotiating? Obviously, would want to put maintenance, taxes, insurance, etc. on her.
Thanks for any feedback.
WillIt would be good to see the house to determine if there is any deferred maintenance. Does she live there now?
You need to get a better handle on what it would rent for. put the zip code into zillow, realtor, and rentals.com to see what a similar house would rent for.
Until you know the exact rent you could get, it would be hard to make an offer.The seller would probably feel more comfortable if you offer to pay the first $50 – $100 in repairs each month.
Sounds like a GREAT opportunity! Let us know what happens.
Jackie – Thanks for the feedback!
I have compared rentals comps and that is where I got the ~$1400/mo from.
I really like the idea of the first $50-$100/mo of maintenance.
My appointment on Friday to visit the house will make certain what the repairs are, apparently OpenDoor has already been and made an offer and described the repairs to her as “cosmetic updates” (paint, cabinets, etc.)
Her monthly payment is currently $800/mo on the house – which seems very high for the original mortgage of $99k, but she might be paying down extra principal (I think she is).
I also think I’d like to establish a 5 year lease at a fixed price – maybe not too far over her monthly payment price to try and produce a few hundred dollars / mo in cashflow without the liability of ownership (but as was said in the Master Lease section…positioning myself for future negotiations to purchase).
Will, remember to NOT use any “investor lingo” because she won’t know what you’re talking about.
Instead of saying i want to master lease your house, say I would like to lease your house and have the right to sublease it to my tenant. Your payments would always come from me. You’ll never need to find a tenant again or worry about your house.
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