deal review

[verbatim 1]

Here are the details:

 

4 bed 3 bath needing no repairs in nice area.

 

1400 month mortgage he says

Owe 145k

comps are 173k

He has relocated out of state so he's now making two payments for over a year.

He listed it at 182 1 year ago with no hits.

He doesn't want to rent.

May leave loan in his name.

States his objective is to net 6k cash.

 

 

 

i offered to buy for mortgage balance or l/o for $1400/month at 170k purchase price with 36 month term. This is when he stated he doesnt want to rent since he is out of state and asked for 6k to "cover repairs made."

 

Im thinking offer 3k and take over payments subject 2 if he gives me time to find a tenant buyer & makes the next 3 payments. I'll try to sell at 179k getting $4500 down & rent for 1600/month so.

 

 

If you can tell me what you would have offered & offer any me advice that would be greatly appreciated.

 

Thanks in advance

[MichaelC 160]

verbatim, is that $1,600/mo rent realistic? What about the $179K price you would be asking? He already tried at $181K a year ago with no hits, and the market has come down since then. Let's assume you are unable to rent it or sell it with those terms. Could you afford to make payments on it in the interim?

Not trying to be negative, but you have to be prepared for the unexpected.

[verbatim 1]

verbatim, is that $1,600/mo rent realistic? What about the $179K price you would be asking? He already tried at $181K a year ago with no hits, and the market has come down since then. Let's assume you are unable to rent it or sell it with those terms. Could you afford to make payments on it in the interim?

Not trying to be negative, but you have to be prepared for the unexpected.

 

Michael,

 

Thanks for the great reply. I know a similar home is advertised for 185k with $4500 down and $1695 a month rent so hopefully my rent is realistic. I probably should lower the option price to 175 with 4500 down so they onl have to get financed for 170 in a year though right?

 

I think he should probably pay me something which is why i was going to ask that he pay the next 3 mortgage payments for an additional $4,200. I also planned to make this agreement subject to me finding a tenant/ buyer.

 

And no, I couldn't afford to make the payments in the interim:-(

[MichaelC 160]

Keep in mind that an asking price of $185K and $1,700/mo is just that: an asking price. Doesn't mean that's what someone is willing to pay.

If you don't have the cash to cover an emergency or a vacancy, you shouldn't put yourself in the position of being a landlord. That said, if you want to pursue this deal, write in some contingencies to protect yourself, such as you stated about being subject to your finding a tenant, etc.

[Andrew Ikeda 0]

Verbatim,

 

Have you done comps on this property? I think MC is telling you that the price may have dropped considerably below 170k. Just a thought.

 

How many other homes in the area rent for $1600+ per month? In my humble opinion, that really seems to be pushing it. If you can get away with that and make it work, you could also include rent credit.

 

Keep us posted on how this develops.

 

Andrew

[verbatim 1]

update:

 

I called him back to let him know the deal was slim due to current market conditions and he said he was going to list it with a realtor for 175k. i should have asked him how long that would take and how much he would net but i didnt.

 

oh well

[MichaelC 160]

With a list price of $175K, if your market is like most these days, he can expect an actual purchase price of around $167K. Knock off the usual 6% in Realtor commissions and he's netting in the area of $157K. That's assuming he can find a buyer who can qualify. . .