Right to extend or what?

[spleano 0]

Hey guys. It's been a while. Working on my second deal. Thanks for all your help. It's always about which TB has the most cash isn't it?

 

Two different TB want to LP a $39,000 house I have under LP for 3 years. A young pregnant woman, her boyfriend and a cat or two. They seem nice and desperate. They have $2,950 and can give me another $2,050.00 in two months. According to my mortgage broker and his credit check they could qualify for a mortgage in 2 years. The other TB is a woman and her puppy. She saw the house with the lockbox. I never met her. She has the entire $5,000.00 now and can pay several months of rent in advance. According to the broker, she could qualify in 3 years. That's tight since I only have a 3 year option. What if she can't qualify? Should I ask for a right to extend on my lease option? How long? Would you offer the seller any of the cash for the right to extend? How much, etc.?

 

Thanks in advance

Dino

Agentx

[MichaelC 160]

Dino, there are several approaches you can take with this deal. Let me give you my two cents.

First, I don't see it as advantageous to give your t/b a multi year option. You're tying up the property for way too long. What if the market turns, (and it will at some point)? Now your $39K house is worth $49K. That appreciation goes to the t/b, not to you.

I'd opt for the second prospect with the $5K in hand today. I can't imagine her needing three years to qualify for a $39K property. And if for some reason she can't qualify at the end of the first twelve months, you can always extend her another six months, maybe a year, but you would have the opportunity to adjust the price upwards if the market appreciates.

[phil43 0]

$5K seems kind of steep to me for a $39k house. Am I missing something here?

 

Phil

[spleano 0]

$5K seems kind of steep to me for a $39k house. Am I missing something here?

 

Phil

No, you are not missing anything. That's how much they offered. That's how much I'll take.

[-Tony- 0]

he who talks first ........hows that go.

 

as for the first lady-I have heard the check is in the mail before ..... A bird in hand fills your tummy (or something like that)

[GetSmart 0]

if the buyer has the much cash to put down, why don't you do owner financing for a little more than market value and sell the note and cash out now?

[spleano 0]

if the buyer has the much cash to put down, why don't you do owner financing for a little more than market value and sell the note and cash out now?

It all makes sense to me. Thanks.