Doug Pretorius (ON) 9 Report post Posted April 2, 2005 I'm meeting with a seller at 5pm today to discuss a SLO. This will be my first in 5 years (my very first deal was an SLO). So I'm more than a little rusty! MotivationThe guy is absolutely desperate to be rid of the payments--he's moving today, no less. NumbersValue about $164,000. Asking $174,900 through a realtor, so after commission and closing, we're talking $160k if he's lucky. I will of course be LPing direct so long as he can get a release from his agent. Prices in the neighborhood have gone up just over 10% in the last 12 months. I figure I'll get a sale price somewhere around $180-$185k. His payments are about $1,150. Rent is $1,200-$1,250. I can get at least $1,400-$1,500. As for paperwork, here's what I've got... 1. LP contract (in my favor)2. Loan information release form3. Home valuation (in case I need to back up my offer price with the facts)4. Credibility pack (previous deals, testimonials, references etc.) Is there anything I'm missing? Share this post Link to post Share on other sites
Kimberly 0 Report post Posted April 2, 2005 Looks to me like you've got everything! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 2, 2005 Good for you, Doug! I'm hoping you can nail it down today. As for the paperwork, I suggest you also get signed and notarized a Memo of Option. If you're going to be in this deal long term, be sure to record the Memo to cloud the title and protect your position. I'm assuming the procedure is the same in Canada for doing this. Correct me if I'm mistaken. PS: you didn't mention length of the lease, but with the sandwich lease go for as long a term as you can get. There's value in time. Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted April 2, 2005 Thanks Kim & Michael. Michael, I plan on recording the contract itself which (here in Ontario) will prevent the seller from selling out from under me, make any future liens subordinate, and protect my position if the seller goes bankrupt. This meeting is just a fact-finding mission, the seller does not want to sign until he's had a chance to talk to his lawyer on Monday. By the same token I will be talking to my lawyer on Monday as well, to double check everything (including whether I need to notarize the contract to record it). The term will be for as long as the seller's mortgage. As you may/may not know, here in Canada mortgages mature several times during the amortization (usually every 3 or 5 years). Going passed that point gets tricky and requires the seller to go back to their bank and renew, at which time the bank may inquire about occupancy and the like. Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted April 3, 2005 Update: The meeting went well. He's going to talk to his lawyer on Monday or Tuesday (he's in the throes of moving). As long as the lawyer says it's legal (sure it is!) and his agent will release him, then it's in the bag. He's willing to do a 5 YEAR Lease Purchase at his mortgage payments (which is $1,118.27 PIT) if he can get $2,000 at closing. The house is in decent shape, it needs a little paint, carpet and cleaning, but nothing my buyer can't handle. The only drawback is that it's got eletric heating, which adds about $50-$75/mo to the heating bill. Has anyone here done a conversion to gas heat financed by Home Depot or some other company? I'm thinking that it might be worth it for my buyer to convert. So, I'll find out in a couple of days if it's a go or not. If it is I'll have to market my tail off to get the thing filled by May 1st (the seller can't afford ANY more payments). Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 3, 2005 Five years? Sweet if you get it! That's a lot of potential appreciation, not to mention up to five years worth of monthly cash flow.The only drawback is that it's got eletric heating, which adds about $50-$75/mo to the heating bill. Has anyone here done a conversion to gas heat financed by Home Depot or some other company? I'm thinking that it might be worth it for my buyer to convert.Electric heat does suck. And it is generally very expensive to operate. Of course, here in my corner of the planet I've used my electric heat, if I recall, three days in five years. So I should really shut up and not complain about it. Now, air conditioning costs are a whole different story... As for heating system conversion, I can't say. As always, be the wise consumer and shop around if you decide to go this route.So, I'll find out in a couple of days if it's a go or not. If it is I'll have to market my tail off to get the thing filled by May 1st (the seller can't afford ANY more payments).I never like taking over another homeowner's problems, (ie, payments), right out of the starting block without something in exchange. If you must go this way, how about trying to get him to agree to credit whatever payments you must make on to the back end of the deal? In other words, if you need to make two payments at $1,150 per, receive a price reduction from the purchase price of $2,300. Or something similar... Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted April 3, 2005 how about trying to get him to agree to credit whatever payments you must make on to the back end of the deal?I'll be buying the house for his mortgage balance, so there's no room for credits, unless he agrees to take a loss which he clearly stated he wouldn't. I do have a cancelation clause so if I can't get someone by May I could cancel I suppose. We'll see, maybe I can convince him that I just can't do it with 3 weeks notice, I need him to cover at least half of May's payment. Share this post Link to post Share on other sites
-Tony- 0 Report post Posted April 4, 2005 Value about $164,000. Asking $174,900 through a realtor, so after commission and closing, we're talking $160k if he's lucky. I will of course be LPing direct so long as he can get a release from his agent. Prices in the neighborhood have gone up just over 10% in the last 12 months. I figure I'll get a sale price somewhere around $180-$185k. I would have seen if he would have taken 160k (I really would have tried for the mtg bal) oh did you mean you will L/O @ 180-185k? either way 5 yrs great Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted April 4, 2005 oh did you mean you will L/O @ 180-185k?Tony, yeah that's what I will sub-LO it for. My price is for his mortgage balance. He was hoping for $2k, but that ain't gonna happen if he doesn't make May's payment. Share this post Link to post Share on other sites
Gary (MO) 0 Report post Posted April 5, 2005 Good Job Doug!! I'm with Tony, I'd go with the mortg balance and forget the 2K to the seller if he can't offer something for the payment due in 3 weeks. How'd you find this guy? Gary PS It's been awhile since I've been on the board...WHEN did we get a spell checker!!!!!!!!! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 6, 2005 PS It's been awhile since I've been on the board...WHEN did we get a spell checker!!!!!!!!! <{POST_SNAPBACK}>It must be Spring! The Cardinals are returning from their Winter hibernation. Welcome back, Gary! Good to see you around again.As for the Spell Checker, I got beat up so bad over this I had to finally relent and have one installed.....not that anyone uses it, mind you. Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted April 15, 2005 Just a quick update... This deal is going nowhere fast, the agent is digging his feet in on the commission, and so the seller is digging his feet in on the price and wants way more down than I'm willing to pay even for a 5 year option. If it was gas heat I might have gone for it anyway, but as it is, I'll wait and see if the seller gets desperate enough to work something else out. Meanwhile I've started up my cold calling again today and already have my first seller who wants me to mail her some more info. Gotta love those classified ads, let sellers spend their money to find YOU! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted April 15, 2005 Just a quick update... This deal is going nowhere fast, the agent is digging his feet in on the commission, and so the seller is digging his feet in on the price and wants way more down than I'm willing to pay even for a 5 year option. If it was gas heat I might have gone for it anyway, but as it is, I'll wait and see if the seller gets desperate enough to work something else out.Let them battle it out, Doug. Next...Meanwhile I've started up my cold calling again today and already have my first seller who wants me to mail her some more info. Gotta love those classified ads, let sellers spend their money to find YOU!Agreed! Share this post Link to post Share on other sites
Gary (MO) 0 Report post Posted April 15, 2005 "No hill for a stepper" Doug. I'd sure make a mark on the calendar to follow up with the seller in a month though....you never know....Gary Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted October 26, 2005 Looks like Gary was absolutely right about following up with this seller (which I didn't do). It's now 6 months later and the house is back on the market listed with... you're not going to believe this... the same idiot agent who couldn't sell it before and screwed up my purchase!!! It's official. I will never understand sellers. Fortunately that's not a prerequisite for getting all the deals you can handle Share this post Link to post Share on other sites
