Possible 1st deal

[Ellison 0]

Rental home that has had some nice repairs done. Appraised at 79,900.

Owner asked:

4k option (Needs some money now for repairs that have been made.)

550 rent

75k sale price

 

Comps are around 85K for neighborhood. It's in a nice neighborhood, most homes in that area rent for $700/month. I know he owes less than 75k, but he won't budge on the sale price. He's tired of renting, but I guess just not tired enough.

 

I've been post questions and read michael's manual, so needless to say, I am ready to start. I'm just not sure if this is a good deal. Just can't decide if I am blinded by my eagerness to start or if it's worth my time.

[MichaelC 160]

Is it a good deal? Let's look at the possibilities......

Apparently you have a somewhat tired landlord. That's a plus. Is there an existing tenant in the property now? If so, what are the terms of the existing lease?

According to your due diligence similar properties in the area are renting for around $700. Your payment would be $550. So, you have enough cash flow to make it enticing.

Even the price works. He won't budge off of $75K, but it appraised at $80K and if you offer rent to own terms, is it reasonable to assume you can get $85K to $89K from a tenant/buyer?

The fly in the ointment is his wanting $4K option consideration. That's a no-no and way too much to even consider for an $80K property! You need to get in for the equivalent of one month's rent, or less. Start by making an offer with nothing down, $550 per month and 36 months, (or longer), and see what he counters you with. Now you've put the ball in his court and you'll know if he is serious or if he is curious. Who knows? He may drop from $4K to $2K. You can counter with $550 and a deal may be struck. You'll probably disagree with me, but at this point it's more important for you to make the offer than it is to have it accepted. If the deal doesn't fly you are all the wiser for the experience. And the next time only gets easier.