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Hi, This is my first opportunity with a pretty house and I would greatly appreciate some help structure offers to present to the seller.
The property was rented out for 5 years at $2400/pm but they don’t want to deal with tenants and has been vacant for past 3 months. It has a loan for $400,000 (variable rate I think) and the house is worth ~$650,000. They have it on the market as a FSBO for $699,998 for last 3 months. They are tired but want the price even though our market has slowed down. The house is in good shape. Some minor work needed in one of the bathrooms and the deck in the back yard needs work. It is in a great neighborhood and would rent for $2400/pm.
Their mortgage payment is ~$1600 per month
Taxes are ~$650 per month
Insurance $100 per monthThey do not have any plans for what to do with the equity in the house. Probably want it for their children college fund in 5 – 8 years.
My thoughts were do a master lease option or subject to but not sure how to structure the offers where it makes sense. Appreciate any help I can get.
Thanks,
gitayou do not want to buy it subject to if it is a variable rate.
are you sure taxes are $650 per month?
that puts the monthly payment at almost $4000 per monthso, they have been losing a money every month with it rented for $2400
verify numbers then get back to usmaster lease an one opportunity
if you could get them realistic with their price, you could get an option then do a highest bidder sale
Thanks Jackie.
I think Master lease with option to buy might work and I can create a $300 month spread and I was thinking of cutting my teeth on highest bidder sale on this property. it is perfect for that.
thanks,
gitaJackie,
I am going to meet with the sellers this weekend.
Their current mortgage is variable rate – 2.75% at the moment. they have 50% equity in the property.
they are tired of being landlords – something always needs fixing and they don’t want to deal with the headache anymore. They do not know what to do with the money. ( I can turn them into private lenders!)
My thoughts are:
1) Do a master lease option for 3 years with 2 year extension. The tenant buyer takes care of all repairs etc.
2) Contract for deed
3) HBS
What paperwork should I take with me?
thanks,
gita
Hi Jackie,
Could you please assist me with the above? It is either going to be master lease option or HBS. What paper work do I take for HBS?
thanks,
gitafor a master lease, you just need a lease agreement
for a highest bidder sale, you need a contract to purchase with a contingent clause that says you will only buy if you find a buyer when doing a highest bidder sale open house for 2 days. decide on the date
work out all the terms like, do you get everything over the strike price or will you split profits over the strike pricefor a HBS, the strike price needs to be low enough that you can sell 10% below market and still make a profit
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