[David Corsi]

David Corsi

I would give him $100.00 for an option to buy for 30 days. I would contact the tenants and offer them $5,000.00. (and forgive back rent) each to move.
Then it is their (the tenant’s) call. I am assuming the landlord / owner has kept the mortgages / taxes etc current during this time.

If they agree and move I would take “subject to” the existing loans.

If the tenant’s won’t budge I would walk away.

Merry Christmas and Happy New Year Jackie!

[David Corsi]

David Corsi

Hi Jackie,

I would confirm the comps are in the $145,00 range for a house, assuming the home has not been updated.

Assuming $35 k in updating and rehab would bring the value into the $190-$200k range I would do the following;
a) Make contact and ask open ended questions to learn about her and the houses history and getting a feel for her situation.

b) Once I feel a rapport I would make offers immediately in the vein of
1) All Cash – in the 60% range and “negotiate (i.e. haggle – which is really not negotiating in my book) up to 70-75% of before repair value.
2) Pay her x # of dollars per month (master lease situation with option to buy)

If she does not want to keep title I would suggest that instead of a lease-option offer we do a seller finance deal with good terms, pointing out she will make more than she would putting the money in a bank. If she has certain time frames for needing some of the money as oppose to a good steady monthly cash flow I will structure it to fit her and my needs.

Exit strategy will depend on the deal worked out above. What is going on in the town and neighborhood of the subject property.
Is the area growing? / declining? / gentryfying?

What type of financing is available for an end user, what are the rates, etc?
I would then act according to the situation.

A) All Cash Deal – I would size up the current and future opportunities of the market. Is there a better use for my cash now or in the near future? Can i get attractive financing (private lender or possible institutional- now that the institutional crowd is desperately looking to increase their yield and are now making 30 year investor loans). If so, buy and rent if attractive area. If area is not attractive and is in decline, offer less than 60% to Jill and flip quickly.

B) lease option – Look for a good candidate for a long term lease. Would not make any offers to them at this time about possible purchase of the property. As time goes by and they turn out to be excellent tenants I may consider offerring them;
a) to buy out my option
b) close with Jill and and sell to the tenant, a possible wrap if Jill has come accustomed to that nice steady cash flow she has been receiving.

C) Seller Finance – depends on rents in the area, if strong positive cash flow is available in a growing / improving area, would hold onto. If area is declining would sell for cash and work with Jill to “move the mortgage” to another property