How much over value...if any?

[lhenley 8]

Owners want to sell for balance of mortgage ... $129,000.

CMA came in at $130,200.

Mortgage payment is $1,200 per month.

 

For me to be able to give 50% rent credit ($7,200 per year) and I receive the 3.5% Option Consideration ($4,900), I'd need to raise the selling price to around $141,000, which is about 8.5% higher than the CMA.

 

Is this a justifiable price or is it over priced?

 

Thanks,

 

Lynn (FL)

[pilot76180 51]

That's pretty tight, so the owner needs to be able to come to close with some money.

Advise the owner that one way to try to reduce what he has to come to close with is to do a 2 year LO.

The downside is the longer the term the less likely the people will purchase.

Do a 2 year LO with 15% rent credit per month, and set the option price around $135k.

In 2 years the owner will owe less and the idea is for some appreciation in 2 years.

[lhenley 8]

John,

 

Using your numbers, $135,000 would be my option price with the seller or my T/B? The 15% rent credit is also with the seller or T/B?

 

 

Thanks,

 

Lynn (FL)

[birtane 0]

The downside is the longer the term the less likely the people will purchase.

Why is that the longer the term the less likely TB will purchase?

Because I thought, the longer the lease term the better chances TB will exercise the option to purchase...bc they will have enough time to fix their credit.

[MichaelC 160]

The downside is the longer the term the less likely the people will purchase.

Why is that the longer the term the less likely TB will purchase?

Because I thought, the longer the lease term the better chances TB will exercise the option to purchase...bc they will have enough time to fix their credit.

In theory, yes, the longer the time the better. However, pilot's thinking is based on his experience that the t/b's who are serious will get it done within a year . If not, then it's not going to happen.

[MichaelC 160]

John,

 

Using your numbers, $135,000 would be my option price with the seller or my T/B? The 15% rent credit is also with the seller or T/B?

 

 

Thanks,

 

Lynn (FL)

Lynn, I'll wait for John on this one, since those numbers have me confused, also.

As to whether the $141K price is acceptable, the market is never wrong. Meaning, if you try you will know quickly whether or not the price will work. What does your gut tell you? You know your market, Lynn.

[birtane 0]

The downside is the longer the term the less likely the people will purchase.

Why is that the longer the term the less likely TB will purchase?

Because I thought, the longer the lease term the better chances TB will exercise the option to purchase...bc they will have enough time to fix their credit.

In theory, yes, the longer the time the better. However, pilot's thinking is based on his experience that the t/b's who are serious will get it done within a year . If not, then it's not going to happen.

 

I see. Thanks, MC.

[lhenley 8]

I just emailed the sellers a Short Offer Form for 36 months / $130,000 / $1,200. I'll market it for $142,500, with $5,000 OC and 50% rent credit.

 

Payments don't start until I find a T/B, so we'll see what happens.

 

Lynn (FL)

[MichaelC 160]

Good. Let's see what happens.

[EQUITY NOTES 0]

Hi Lynn

When you say you will market it for 36 months for $142,500 with a 50% rent credit and $5,000 o/c with a net to seller of $130,000

 

Are your rent credits for 12 months?

 

I see a net to seller for 130,300

 

Am I missing something or did I calculate it wrong?

Tom

[lhenley 8]

Tom,

 

Probably not. Those are the numbers I see I need to make it work. Ofcourse, the kicker is finding a T/B who thinks a sales price of $142,500 is a good deal.

 

I haven't signed anything with the owner, yet.

 

Am I try to make a NO DEAL, a deal?

 

Lynn (FL)

[<Steve> 82]

What is more important to tenant/buyers are the terms, more than the price; rent amount, lease term, option consideration, rent credits then the purchase price. So, a top of market price, although important, is not their main concern. And with rent credits the price drops anyway.

 

You should send a Short Offer of what you can do. See what response you get. You may get the deal, or you may need to negotiate a bit more if there is room to.

[MichaelC 160]

Sometimes the seller needs to face the ugly reality of their property: either the house remains vacant and they pay on it each month, or they set up the Rent To Own with market friendly numbers and stop the bleeding. Of course, that means they may have to come out of pocket a few grand next year, when and if the option is exercised. But there is no perfect solution and the one you are offering is as good as it gets for the homeowner.

[lhenley 8]

Michael,

 

Am I trying to force something to work, when it won't?

 

I need to offer it to my t/b at $135k, meaning NET to the seller would be $123-125k?

 

Lynn (FL)

[MichaelC 160]

Legitimate question, Lynn, but one I can't answer because I don't know your market as well as you do. Based solely on the numbers it seems like the terms are going to be a difficult hurdle for quickly wrapping up a deal with a t/b. But sometimes numbers don't tell the whole story. For example, does the house show particularly well? Is the neighborhood and/or school district desirable? In this price range, what is the inventory? Etc.