I'm offically making myself accountable to the Naked forum!

[MichaelC 160]

Doug, that's the perfect candidate for a CA. Open to a lease option, but wanting more control.

[Doug Pretorius (ON) 9]

MC, you'd think so but it doesn't work out that way. The minute they realize I'm not looking to live there myself, they switch off. Doesn't matter what spin I put on it.

 

The only thing I can do is not bring it up. But virtually everyone asks: "Are you going to be living there yourself?" And I'm not going to lie, so...

[MichaelC 160]

Must be a Canadian thing, Doug. You know what our market is like down here. What's the latest with your market?

[Doug Pretorius (ON) 9]

The market here is rolling along. Appreciation has slowed by about half but it's still steady. Inventory is huge right now because of the backlog from an unusually long hard winter but that doesn't seem to have put much of a hamper on sales or prices.

[vballdarin 1]

Allllllllrighty folks............My first stab at negociations with a seller.

 

Seller brought me 2 possible houses (basically the same)

 

Here's his offer for each house:

 

$172,000 purchase price........$1200 rent with $400monthly credit

Lease term = 24months

Didn't mention option money

 

I'm toying with a counter-offer of this:

$167,000 purchase price........$1100 rent with $500monthly credit

Lease term = 30months

Very little option money

 

then offering to 2 lucky tenant buyers:

$170,000 purchase price........$1200 rent with no rent credit (or some if they have more option money or decent credit)

Lease term = 24 months

Option money = $5000(=2.9%)

 

Particulars:

Actual home value = appx$165,000

Market rents = in line with $1200

 

Suggestions, Questions, Wonderments, Discussion?

Thanks

[Doug Pretorius (ON) 9]

Doesn't sound like much of a deal for the T/B, for $5k all they're getting is the privilege of buying the house in 2 years for $5k more than it's worth now. I don't see too many T/Bs liking the idea that their money isn't working for them, they might as well just keep renting.

 

I would give them at least $200/month credit so they feel like they're getting somewhere.

[vballdarin 1]

Doug.....

 

I agree. Those numbers for my counter-offer would be the least i would accept on my end. The better terms/price I could secure....i would be more than happy to pass some onto the tentant/buyer.

 

And I would apply all option monies toward their purchase price along with that $200/month credit.($170,000-$9,800=160,200)

 

I'm just not sure that's enough of a spread for me to make the numbers = DEAL.

(((Thinking that I, in some way/shape/form, have to get an ultimate purchase price for each house at >$150,000)))

[MichaelC 160]

What type of deal are you trying to set up? A sandwich lease or a CA? Because at first glance those numbers don't work for me.

[vballdarin 1]

I will be trying to set up all my deals as SLO's.

 

What things would you suggest I could do to make the numbers "do-able"?

[Doug Pretorius (ON) 9]

Don't know your market and what buyers are willing to pay. But in my area based on the numbers you've posted here the following would be a cakewalk:

 

Price: $175k

Rent: $1,200/month

Credit: $200/month

Down: $5k

Term: 24 months

 

Seller nets ~$165k in this scenario.

[<Steve> 82]

Not knowing anything additional about the property or the seller, as an SLO, I would send a short offer for:

 

$140K to $145K price to the seller

$900. rent amount

3 year lease term avg.

[<Steve> 82]

Hi Doug guess we posted at the same time.

 

I would offer what Doug has mentioned to the t/b but would give a 50% rent credit and knowing I had room for a 75% rent credit down the road should I need to place a second t/b quickly

[MichaelC 160]

I will be trying to set up all my deals as SLO's.

 

What things would you suggest I could do to make the numbers "do-able"?

Darin, if you're trying to set up the deals as SLO's, you must have enough of a spread between what you are paying the homeowner, and what you can expect to receive from your t/b. You can pay full retail, hoping that you will find a t/b willing to pay you even more. We've all heard the expression, "You make your profit when you buy". That's what's at work here.

If you can get a $20K spread or so, then a SLO is a possibility. If not, then a CA would be a better approach.

[Doug Pretorius (ON) 9]

Steve, do you find 50% or 75% rent credits work well in your market? I've found them to be overkill and T/Bs almost seem wary, thinking there's got to be a kind of catch with such a big credit.

[Doug Pretorius (ON) 9]

BTW my numbers were based on this being a CA as I agree with MC that there's not enough spread for a SLO, unless you can get the seller down.