Lakeveiw Lot
Nee alittle advice here. Lot available @ approx. 12,000 sq. ft. overlooking a recreational lake here. Owner no longer wants it and is willing to let me take over payments. Here are the numbers...
Original purchase price was $21,000 he owes $18,000. Since the purchase the subdivision has recieved pave access and util are avail. Current FMV $26,000+ The current payments are $275 a month.
The only problem is my budget, it very tight at the moment due to several other investments on the line. I am interested in a quick resale of the property as is.. Any advice as too how I may approach this deal let me know. Remember LIMITED FUNDS AVAILABLE....HELP
Opyion it and then aggressively market it for the FMV.
Pay as little as you can for the option.
johnqreplies
Exactly what do you mean by option it?
Remember I am a newbie. Can you detail it alittle more for me. Thankyou for your advice.....
Spend some time on this board and you will learn a great deal about working with options to purchase.
jorge is right...go up to the lease/option thread and surf around, you'll learn a lot.
But for now, I'll explain the basics. There are a number of ways options can be used but for the sake of simplicity, I'll lay this example out for you:
You find a piece of property with a fair market value of $100,000.
The owner is desperate and has had no luck with real estate agents. He will take $85,000 for the property.
You happen to know of a guy, Tom, who is seeking a lakefront lot.
So you see a deal here. BUT you don't have $85,000 to buy the lot.
So, you OPTION the lot for $85,000, which means you give the owner a payment that lets you control the property for a set number of days. We'll say 90. (This number is flexible but you want room to work.) And if you agree to EXERCISE your option in those 90 days, you can buy the property for $85,000.
The amount you give the owner is totally negotiable. There are many on here that suggest $10 and I agree. It can't hurt to try the lowest number possible. But don't be surprised if the owner asks for a higher option fee. Again, you can negotiate, and if you don't have the cash on hand, you can walk away. But I bet a desperate owner will take anything you offer.
So, you haggle and he options the property to you for $100 for sixty days.
You call Tom, show him the lot and explain that it's worth $100,000.
He offers you $95,000 cash and you take it on the spot.
In this case, the cleanest way to do the deal would be assign the option to Tom, and he would pay the owner directly. You walk away with $10,000 cash, the difference between purchase price and the sales price.
Now, this is way oversimplified and only one way to work a deal. But I think it sums the process up pretty well.
Thanks johnq for the advice, I will keep you posted..