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Hello there,
I am out here in So Cal. trying to structure some creative offers. I?ve never done a creative deal al though I?ve had several opportunities- no confidence.
Here are the details:
3/2 sfr
1387 sqft.
$250,000 balance
Good neighborhood
$1650 rents-low could rent for $2000
ARV $420,000- $430,000Owner wants to retire soon, does not need the money- wants out of land lording.
He was hoping to get $410,000.00 for the house.His main concern seems to be the hassle with tenants.
Since he doesn?t need the money, I was hoping to show him that he will not net $410,000 get an option to buy at $348,500 pay him the $1850 a month.
Evict tenants and sell for $425,000-$430,000 with owner financing.
What am I missing?
Instead of buying now… it would be better to just get a lease option.
Offer an option to buy the house for $410,000 in 5 years ( that will give the CA market time to rebound)
Lease for $1650.Then, don’t evict the tenants, but under the lease terms and conditions raise the rents gradually. You can’t jump from $1650 to $2000 and expect them to stay. I think some of CA has rent control laws too so you need to check in to that.
Benefits to everyone:
He gets landlord relief and his price
you get upside on property as it appreciates, some cash flow, and you get a scheap and afe way to test drive the house. If the market is still flat in 5 years, you do not have to exercise your option and can just walk away.
Anyone else have some creative ideas?
Jackie
Thank you Jackie,
I did not mention the fact that I more interested in cash at this point vs being a land lord. I also did not mention that I am licensed to sell real estate.
The gentleman called me because of the convenience I offered on my mail piece as a buyer. Once he told me what he wanted for the house I offered to list the property but he was not interested.
Agents are a nickle a dozen and most have been asleep for a year. They are still playing the price high and negotiate down game.
I was hoping to set my self apart by using the gentlemans situation (the good and the bad) in ways other agents might not consider.
A situation where I could buy at a discount and sell at a premium with owner financing would work for me. It would get me cash, resolve the sellers problems and make the deal more attractive for a buyer.
I guess my question is are there others ways for me to do this and what are the details I have not thought of?
You’ve got a tenant in the property. They have a lease and in CA of all places, you have to follow the rules of the lease. Unless the lease is a month to month, you can’t just evict the tenant. So, how do you propose selling the house when there is a tenant in place? The only viable buyer is the tenant who probably does not have 2 nickels to rub together. You could BUY out the tenant possibly but then you’d have a vacant house and the seller would want monthly payments. You could offer cash to the tenant for their inconvenience while you show it to potential buyers.
It sounds like a straight option is your best bet. Establish a strike price with the seller and get as much time as you can to sell the house for more.
But you’ll have to figure out what you’re going to do with the tenant before you can proceed.
Jackie
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