misenhour 0 Report post Posted June 23, 2011 -On the market home is worth $149k-mtg. Payoff, $127k-mtg. Monthly payment $904 piti-heated sq ft.1566 /add'l 1566 add'l sq ft with basement-2 fireplaces, one in basement-hardwood floors in the halls and bedrooms-new cabinets in kitchenAll appliances in kitchen stainless steel and he is including the washer and dryer and other odds and ends-LR has vaulted ceilings with nice wood beams exposed-subdivision has lake access, and 3 different parks in walking distance. Issues:-needs a heat pump already quoted $1500-may need radon remediation $1200-needs about $500 in floor covering in the DR Seller is highly motivated and broke and can't make any of the above repairs. Considering selling home for the payoff. My issue is, I don't have the money to fix the above listed items. Advice please. Share this post Link to post Share on other sites
speedingpenguin 19 Report post Posted June 23, 2011 Well, you could try doing a lease option with it and market it as a handyman special, maybe you'll find a plumber or someone who's looking to get in to a place and doesn't mind putting some work in to it... might have to compromise on another part of the deal to make it make sense.... low option $, lower than market rent for a certain amount of time, long lease with generous rent credit... something to sweeten the deal, contingent upon those repairs being completed within a timeframe? I've got a few people on my buyers list who specifically are looking for something they can rent to own that needs some fixing up... Can't hurt to try! The other option would be just that... an option! If the realistic fair market value with those 3 repairs done is $149k, and the seller will let it go for $127k and it needs $3200 in repairs, you could try and tack on $2-3k assignment fee and find a retail buyer or an investor buyer looking for a rental property who'll pay $130k for it and get a bit of a deal for doing some work themselves... Not the deal of the century, but a below market deal without the aggravation of waiting for a short sale... and it sounds like a pretty nice house! Either way, it can't hurt to try if you think it's worth your time! If nothing else you may find some buyers who may be interested in future deals you get! EDIT: Another thing you could consider is buying it (wholesaling it) subject to, where the seller will leave the mortgage in place and an escrow company will handle taking payments from the buyer and making the mortgage payment each month. I'm not 100% familiar with this sort of transaction so I don't want to go in to it much more than that, but do some research and see if it's something that might work. Would be an attractive deal for a retail or investor buyer if you set it up right! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 23, 2011 D, has the open agreed to a lease purchase? Or is he strictly wanting a sale and to be done with it at this time? Share this post Link to post Share on other sites
misenhour 0 Report post Posted June 23, 2011 MichaelC, He just wants the payment off his back. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 23, 2011 . . .He just wants the payment off his back.Then I would go with a Cooperative Assignment. If the terms are market friendly you will move the property quickly and put three grand or so in your pocket.My experience with these types of deals, (mild fixer offered as a Rent To Own), has always been very good. Prospective t/b's are eager to see the house and do the deal. But again, the key is in the numbers. Work from his payoff and add your option money and the rent credits. That's the price you market the house at. Assuming the market rent will cover his PITI, the deal should go down. Share this post Link to post Share on other sites
misenhour 0 Report post Posted June 23, 2011 I understand the mtg payoff + the option fee ... Reasonable market rent would be $1000. The lender will allow anything over what is reasonable rent to be applied as a rent credit. I could probably charge the $1000 rent and give the $100 rent credit , but what do you mean by add the rent credit? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 23, 2011 $100 rent credit won't make your phone ring. Offer 50%. That's $500 per month, or $6K over the term of the one year lease. Add that to the homeowner's payoff of $127K, along with the anticipated $3K option money that goes to you. That equals $136K, which is the price you market the house at, maybe a few thousand more for a cushion. But it's still below value according to your numbers. Someone will bite, Michael. Share this post Link to post Share on other sites
<Steve> 82 Report post Posted June 23, 2011 my 2cents... Rent credits are typically not considered part of a down payment. Rent crediits reduce the purchase price and allows the t/b to have additional equity in the property, resulting in a lower loan-to-value. So large rent credits should not be a lender issue. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 23, 2011 It's like Steve said. The rent credits are a credit towards the purchase price. Nothing more. Meaning, if you advertise the property at $136K and the rent credits total $6K, the the purchase price becomes $130K, (minus whatever option consideration they paid you upfront, also). Share this post Link to post Share on other sites
misenhour 0 Report post Posted June 23, 2011 Ok, got it! I appreciate all the advice, and I ordered the manual. Share this post Link to post Share on other sites
