CA's versus L/O

[lorenwoods2 0]

With the correction in this housing market that is currently going on, which God only knows how long will last...Do CA's become more attractive then a L/O?

 

MIKE

[-Tony- 0]

Mike,

 

I would say it all depends on the situation.

 

If your talking about in the owners eyes, it to depends on the situation. If they need out they will sign anything you put in front of them. If they are just tired of waiting for their house to sell, but aren't gonna give up any equity then a CA is more appealing to them. Or they might not have the equity for a SLO. See, if they just bought the house in the last couple of years in my area the rent will not cover the mtg and the spead is not there for a SLO.

 

If your talking about my point of view; I will do a SLO in a heartbeat IF there is a good spread and it will cash flow. If not I will pitch a CA. The key is to listen and try to read between the lines (heck sometimes they will straight out tell you)

 

Tony

[Jason (AL) 1]

Actually, a CA is a L/O.

It's just that you're assigning your position

in the deal to a TB.

 

It's not really a decision to do one over the other.

Each specific deal will determine which method

you employ to get paid.

 

Like Tony said, if there's enough equity

and cash flow, then the sandwich L/O

would be the thing to shoot for.

 

However, if there's not much equity

and/or the seller isn't quite as motivated,

then a CA is the solution.

[MichaelC 160]

With the on target replies that Tony and Jason gave you, there's obviously no need for me around here. Oh, well. It is Friday. It's unseasonably warm and humid for January. My neighbor pilots a 142' yacht. Wonder if he needs a deck hand this afternoon. . .

[Jason (AL) 1]

With the on target replies that Tony and Jason gave you, there's obviously no need for me around here. Oh, well. It is Friday. It's unseasonably warm and humid for January. My neighbor pilots a 142' yacht. Wonder if he needs a deck hand this afternoon. . .

 

Your weekly mafioso body-dumping day, eh?

[MichaelC 160]

With the on target replies that Tony and Jason gave you, there's obviously no need for me around here. Oh, well. It is Friday. It's unseasonably warm and humid for January. My neighbor pilots a 142' yacht. Wonder if he needs a deck hand this afternoon. . .

 

Your weekly mafioso body-dumping day, eh?

I've always been an animal lover. Sharks gotta eat, too.

[lorenwoods2 0]

Thanks for the replies guys

 

MIKE

[lorenwoods2 0]

I guess what I was trying to ask, now that I think of it...in a buyer's market, like we are in right now...Will there be more CA's done then in a seller's market...? Since most homes are not appreciating now or anytime soon, hence the backend profit won't be as much as in a seller's market where the home is appreciating over a year or two??? Or am I way off?...and that backend profit we get is built in from the start?

[MichaelC 160]

In a buyers market, creative deals of any kind are more readily accepted. A homeowner who can't sell but needs to becomes motivated. Simple math, really.

If you are looking to do a sandwich lease, you need to first get it at a good price. Where prices will be 36 months from now is anyones guess. If they rise, you benefit from that appreciation. If they fall further, you have the right to allow your option to expire and return the keys to the homeowner. In the interim you have collected some option money and monthly cash flow.