"is The House Available For A Straight Purchase?"

[Brian - L.V. 0]

Hmmm......I'm sure the seller I got this SLO from would have loved to have gotten this email.

 

"Hello,

 

Is this house available for a straight purchase?"

 

 

I got the house on a 2 year option at above current market value (6% remember, this is Las Vegas.....), so I can't really just assign the contract to this guy for a fee if he wants to purchase now. Even though my profit would be a lot higher if I L/O'd to a t/b, is it smart to approach the seller about changing our SLO to a pure option (most likely at around 5% less than comps if I want some $) for some quick cash?

 

I'm sure it would be considered brokering if I canceled my agreement for a $5k kickback before/probably after the sale (plus I couldn't do it without a broker-like agreement securing my payment in the deal). Even though I've gotten good response so far, I'm only tossing around the idea because it's a 2bed/2bath house (which aren't unpopular in Vegas due to the fairly large singles population). Suggestions?

[MichaelC 160]

Assuming this potential buyer is serious, I would put my cards on the table with him. Explain that you have this great deal with the homeowner for 24 months, which locks in the terms for that period. Explain that you can, at any time, buy the property, sell it, sublease it, and/or assign it. In short, the holder of this Agreement controls this property. The homeowner is not at liberty to sell the property, but you are. After explaining the advantages this contract wields to the holder of it, ask him what he wants to do. You just may be able to pick up a three grand assignment free for your troubles, if that's appealing to you.

I definitely wouldn't want to go back and ask the homeowner for a drastic change of terms as you're suggesting. It may raise an eyebrow or two, give the homeowner cause for concern, and make you look shady.

[Brian - L.V. 0]

I definitely wouldn't want to go back and ask the homeowner for a drastic change of terms as you're suggesting. It may raise an eyebrow or two, give the homeowner cause for concern, and make you look shady.

 

That's just it. I don't want to approach the seller to change the contract, especially since I can see larger profits at the end of the lease. Part of that post was really just me "thinking out loud". I'm still getting responses everyday on the property and my newspaper ad hasn't even come out yet.

 

After sleeping on it, I was going to do like you suggested. If he'll throw me $6k-$7k now for the contract, I may do it. Even though the property will be worth just over $290k after 24 months if it only appreciates 10% per annum (Appreciation in Vegas is currently in the higher teens valley-wide).

 

What I'll probably do is talk to this guy and tell him what I can do, but I'd like wait a little while. I'd rather have him walk then loosing a t/b. Being I have a 24 month option, I should sell it on a 22 month option or less right?

[MichaelC 160]

Being I have a 24 month option, I should sell it on a 22 month option or less right?

Sorry, Brian, but you lost me with this. Could you clarify, please?

[Brian - L.V. 0]

It's not smart to have the t/b's option date end the same time mine does, is it? I'm thinking that if the t/b doesn't end up exercising the option, I'm going to need some time to either sell outright via double close or to arrange financing to purchase it myself. With back end equity of over $40k, I don't want to lose that if the t/b falls through. Is there a way to go a 24 month option and still protect the equity should the deal fall through?

[Kimberly 0]

Is there a way to go a 24 month option and still protect the equity should the deal fall through?

Paragraph 2, Option to Purchase -- tenant/buyer is required to give written notice of intent no later than 60 days PRIOR to the agreement expiring OR he loses the Option. That gives you your 2 months to get the property sold or arrange for financing.

[Brian - L.V. 0]

Ok, so it's kosher to have a t/b's option coincide with mine since they have to give me the 60 day notice. If they fail to do so, do you give them a friendly reminder or do you just tell them their option expired and they need to move so you can sell/arrange your own financing?

[MichaelC 160]

Keep in mind that if you assign your deal with the homeowner over to any third party, you are out of the deal completely. What happens after you assign any deal is of no concern to you.

Ok, so it's kosher to have a t/b's option coincide with mine since they have to give me the 60 day notice. If they fail to do so, do you give them a friendly reminder or do you just tell them their option expired and they need to move so you can sell/arrange your own financing?

While the t/b is required to give you a minimum of 60 days notice as to whether or not they will be exercising their option, I remind them a month or two prior to that. Just a polite phone call to light a fire if one isn't already burning, and to let them know I can help them with a call to a mortgage broker or two.

If the 60 day deadline passes and I haven't heard anything, I then follow up with a letter stating that the deadline has passed and that I will be calling them in the next few days to go over their plans and mine for the property.