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Good evening everyone,
I would like to offer the seller of a 2b/2ba Condo Apartment in New Jersey 2 offers: Owner financing or Lease-Option. May I please request your feedback. Thank you.
P&i – $715/mo
HoA Fee incl. water/heat/AC/elec – $689/mo
Special Assessment – $122/mo until 12/2022
Property Tax – $388/mo
Sold Comps in the same building: 180k-190k
Market Rent: $2000-2200
Reason for selling: Seller wants to move to Utah immediately, for new job opportunity and better snowboarding in the winter. If apartment doesn’t sell within 3 weeks, they will rent it out. Seller open to terms or lease-option, but would eventually like to buy another personal residence in less than 5 years. I told them I can offer quick solution, but if they are looking for the most profitable transaction, then they should wait out for a conventional buyer which may take 60+ days to close. This has been the seller’s personal residence for 3 years.
#1 Owner Financing Offer:
$210,000 AS-IS Condition
Entire Balance of $195,000 due to seller July 2025.
Offer expires June 30, 2020.
Close no later than July 31, 2020.
#2 Lease/Option Offer:
Option to Purchase: 215k
Rent for min. 5 years, total of $25,000, payable monthly. With options to renew initial rental term 8 times. Agreement to include right to sublease to a qualifying tenant, approval by seller, as required.
1st $100 repairs
Lease can begin on the day, owner chooses to vacate to Utah.
For consideration of $10,000, Tenant has the right to purchase property for $215,000, after 5 years of early/on-time rent payments, 100% of consideration, early/on-time rent payments, and any improvements to property, to be credited against purchase price, at time of sale. Seller to be notified 30 days prior to purchase.
Your feedback is appreciated.
Here’s a better plan with less out of pocket expense (like none) and much less risk!!
Just lease the house with the right to sublease it. if it will rent for $2000 a month ( on a good day) you need to get YOUR rent down to about $1500 max. In this market, set it up as a performance lease which means you don’t pay them a penny until you get a good qualified tenant in the property. You might make a little less cash flow but there is much less risks.
Find out what just the HOA fee is only (not lumping in utilities)
The tenant can pay utilitiesl
Give the property a test drive for a YEAR then go for the option or seller financing. If you make the payments on time and don’t call the owner with a lot of repair requests, you are the logical person for them to sell to with seller financing. If you discover the owner is not so easy to deal with or the house has hidden problems, then you can walk at the end of your lease. win win.
You don’t need to pay more for this house than it is worth just because the seller will finance or do a lease option. What do they owe??? Is it a fixed interest rate loan with no balloon?
Keep in mind that the economy is NOT GOOD now and will probably get worse before it gets better. The price of the home could go down a little or a lot in the next year.
Hello Jackie, Thank you for your feedback.
The building is not sub-metered, and the utility bill can’t be placed under an individual.
HOA Governing Docs show that the apartment’s share of Proportionate Liability for Common Expenses is .5371%. My understanding is the HOA fee portion is $319 + Common Exp. $370 = $689/mo HOA?
I will limit my offer to the asking price, thank you for the suggestion.
This is a 30 yr fixed interest rate no balloon, and the remaining balance is approx. $143k.
In that case, I would walk away from this one!
It’s bad enough to have an HOA but when they control utilities it makes it a NO GO ZONE.
Even if you could buy subject to the mortgage at $143,000 I would walk because of the HOA structure
too many other REAL deals out there.
Alan when you’re using an option, you should be able to convince the seller that they can accept the option consideration that you are paying them as a monthly payment for rent payment.
Whereby 100% of that option payment going to them will be money that will be to their benefit..
If it’s a traditional seller over complicating the offer, can make it more difficult for them to understand.
If possible sit down and talk with them and ask them what will work? You’ll be able to see their expressions and make your own judgments. Remember to leave your heart in the drawer in the drawer at home.
The compassionate and understanding, but at same time. A face-to-face meeting without a real estate agent is truly the very best way letting them tell you what they need and no matter how you slice it up at the buyer, utilizing an option where 100% of the monies you pay our credit toward the purchase of the property. That will be tough to beat.
The best thing you can do is to check your local laws and make sure that your option is written 100% correctly, and that the option is secured to the title of the property, it sounds like a condominium so I would certainly check to see if you have marketable title.
I have done a number of loans on condominiums and there’s quite a few of those that have condo Association dues and don’ts.
Start low and increase your dollar amounts as you feel safe and as you you need to. Remember you’re helping them get what they need!
When negotiating be sure to tell them that you have another property that you’re considering, but because they’re such nice people you wanted to talk to them 1st, and do not be afraid to smile. 🙂
Reenter rate that you’re there to help them! To your success,
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