Quad--lease/op, CA, or sub.2?

[Lydia 0]

This Quadraplex appraised for $162,500 about 5 years ago. Rent is $450 per unit. Seller wants $10,000 (which he'll wait on) and someone to take over the payments ($1,050 payments (P&I on about a $135,000 mortgage)The seller is very flexible. I know I can do a 3 year lease/option(or longer) and assign it, or else do a CA, but I was wondering if there is any advantage to taking it Subject to the existing financing.

 

Comments?????

[Mr.B 0]

Did you ask why he wanted to sell? I think I would dig a little deeper before doing a sub2. You don't want to inherit his problem if it can't be fixed. Otherwise sounds like a real nice spread you have there.

 

~Mr.B

[Lydia 0]

He is selling because he wants to get out of the landlording business. He has several duplexes in addition to this one. This is actually the most "high maintenance" property he has. He has a "regular" job that has become increasingly demanding, and he just doesn't have the time to landlord.

[Kimberly 0]

Sounds like you have the opportunity to get more deals from him.

 

Is he open to doing a sub2? Do you know how to do sub2 deals?

 

You could do it either way. The advantage to doing a sub2 would be in holding title to the property.

 

This Quadraplex appraised for $162,500 about 5 years ago. Rent is $450 per unit. Seller wants $10,000 (which he'll wait on) and someone to take over the payments ($1,050 payments (P&I on about a $135,000 mortgage)The seller is very flexible. I know I can do a 3 year lease/option(or longer) and assign it, or else do a CA,

Since he's willing to wait for his money, you could do a CA (which is a lease/option that you assign!) where you get all the option consideration, payments of $1,050, option price of mortgage balance + $10,000.

 

Kim

[MichaelC 160]

Lydia, if your "read" of this homeowner is accurate, it seems to me the ball is in your court. Please, please don't overanalyze this deal. Decide what you want to do and make your offer.

Based on your description of the property, the numbers involved, and the homeowner, you can go either Sub2 or a long term sandwich lease purchase. What's your preference? If you can get it no cash out of pocket, which you seem to be suggesting, a lease purchase is fast and easy. On the other hand, if a substantial sum of money is required to secure the deal, getting title to it is a must.

[-Tony- 0]

Maybe I missed it or mis-understood but what is the sell price (135k) (135+10k later)? You also said PI is $1050 what about TI (?). what do comps go for? This may be hard and you might have to go with an appraisal. If it is high maint. might there be some maint.he deferred that could bite you in the butt? Have you had it inspected?

 

I guess what I am saying is a 162k appraisal 5 yrs ago could go down if not maintained.

 

Could you turn them into town homes or condoes?

 

Tony

[Lydia 0]

When I said "high-maintenance"--I meant not the building, but the tenant/neighborhood. It is pretty low-rent, but the reason the guy wants $10,000 is because he has put that much into it. He is looking only to break even, and I don't think I have to give him ANY money up front.

 

I have had a horrible week physically this week--worse than any in about 2 or 3 months. I was originally toying with the idea of keeping this and being landlord. The seller told me it needs to be checked on once or twice a week, to make sure trash is picked up, cars aren't parked where they shouldn't be, things are in order, etc. After this week, I am inclined to flip it. I might meet with the guy today and get some kind of agreement written up.

[MichaelC 160]

I was originally toying with the idea of keeping this and being landlord. The seller told me it needs to be checked on once or twice a week, to make sure trash is picked up, cars aren't parked where they shouldn't be, things are in order, etc. After this week, I am inclined to flip it.

There is an old expression in real estate: Ugly houses attract ugly tenants. Meaning, these lower end properties, particularly multi units, are usually very hands on and attract a very transient crowd. I think a short term approach is best here, Lydia. Take control of it, and flip it fast.