option8 0 Report post Posted March 28, 2003 Deal summary: Out of state owners have a house near here. We spoke with them during the deep snow, viewed the house from the outside because it is occupied by renters. Sellers are now highly motivated and open to a 3-5 year l/o. They want to purchase a house in new state, need to free up this asset to qualify for next home. House is a 3 bed room cape cod, 2 bath, single car garage, neighborhood is nice. Asked 107K, realistically expected to get 92 to 95K. Now it turns out the tenants weren't too kind to the property and it will need new carpet and paint. We will make an offer on this house, however I don't have any rehab figures on the cost of new carpet and interior paint. Questions: Does anyone have Robyn Thompson's materials on rehabbing? Can anyone tell me what we should allot for carpet and paint? I'm thinking the offer should be now 90 to 92K. Does anyone have a list of leverage improvements, what they should cost and how much we should such improvements to increase the resale value? Thanks for your input.option8 Share this post Link to post Share on other sites
NickC 0 Report post Posted March 28, 2003 Option8, I was just wondering what the numbers are on property? Comps.? What are the monthly payments? Current? What is your exit strategy if you want to l/o? Sandwhich deal? Will it cashflow? Just curious. As far as repairs.....can't help you there....anybody else? ThanksNick Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 28, 2003 Option8, carpet and paint, and other cosmetic repair costs would best be determined by a few local handyman/contractor types. When doing this type of work, let's be honest, you are looking to cut corners wherever possible. Lower grade carpet and pad, for example, and generic brand paint.I think this localized approach will get you a more accurate cost estimate than would come from an outside source.You said the homeowners were asking $107K. Was this with a Realtor, or as a FSBO? Also, you stated they realistically expected to receive $92K to $95K. Did they tell you this? If so, that revelation along with the necessary repairs, (which you will point out to them and give them the high estimate of repairs cost), would incline me to make an offer in the $80K range. You can always increase that offer afterwards, if necessary. I was once told that when I make an offer, if I'm not sheepish about it, I'm offering too much. I always remember that.Lastly, when making that offer don't forget to point out that there won't be any Realtor's fees or closing costs, and that your offer is a true net price to them. It just might fly. Share this post Link to post Share on other sites
option8 0 Report post Posted March 28, 2003 Michael, Point well taken about the localized approach to repairs. I just thought there were some industry figures someone might know about. I'll have to look back thru my notes, but I think the 107K price was a listing price. It was then rented out. They told me that they realistically expected the 95K price. (I think this is what is owed plus a little) All of this was before we found out the tenant trashed the place. Now, they are more motivated and the property isn't in as good a shape as it was when they rented it a year ago. It is currently rented for 900/month. option8 Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 28, 2003 If they owe what the property is valued at, all is not lost. That's one of the advantages of a properly structured lease purchase deal. Pay full price and profit! How?Well, if this homeowner is willing to give you three to five years, there is value in that time. Having control of the property for that period of time makes that contract a valuable and relatively easy one to flip/assign. For example, say you locate a wannabe home buyer who can't qualify today. Well, how quickly do you think he will jump at the opportunity to take this property at today's price and not need to worry about financing it for three or more years? There's an assignment fee in it for you.Another possibility: with numerous years in this deal, you can keep and hold. Use it as a straight rental in the meantime if the rental market allows you to at least break even. In the meantime, you might be receiving some monthly cash flow, and in three to five years any appreciation that occured is yours. You could then exercise your option and purchase it, or decide to sell it and pocket the difference. All this while still paying full price, and nothing out of your pocket, (or very little, anyway).Lease Purchasing.........Smart Real Estate . Share this post Link to post Share on other sites
option8 0 Report post Posted March 28, 2003 Michael, I think there is another choice here. Sell it on a 2 year Lease option at something slightly less that the value would be at the end of the a 2 year term. Profits are in:1. Lease option fee (3-5%)2. Spread between payment to seller and rental price to tenant puyer3. Loan paydown4. Spread between my sell price to sell and purchase price from buyer5. Oportunity to lease option again if the buyer choses not to exercise Am I missing something? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted March 28, 2003 Am I missing something?Not at all. One more possibility to explore. It really comes down to your preferences and the numbers involved in the deal.First things first, though.............let's lock it up. Share this post Link to post Share on other sites
-Tony- 0 Report post Posted March 30, 2003 option8, how are your profits in 3. Loan paydown? Okay, my real question is I checked out your web page, and I was wondering how many leads and how many deals you have done due to your web page? how did you advertise your web page? Lastly, how the heck do you find out if it is available in your area? PM me with more details Tony Share this post Link to post Share on other sites
