How Would You Structure This Lease/Option/Purchase Deal?
Ok, got a property that can easily sell for around $280k...........want to structure this as a Owner Finance deal....lease option/lease purchase.........tell me what you think: Option Consideration - $12,000 down, Monthly payment - $2,800. How long should the lease/option - lease/purchase run for???? In the ads (newspaper, flyers, ec.) , how would you word this deal? .......... And I'm also seeking a partner on this deal, (will use whichever comes first to get me out of the hole for now) how would I word my "Seeking A Partner" ads if i'm looking for a $8,000 cash investment and once the profit is sold the profit will be around $20,000 for us to split....i would do a 70/30 split with the other investor getting the 70? Would this interest investors, you think? (i.e. "INVESTORS: Looking for a CASH partner for GREAT deal......$8,000 investment - $20,000 profit........." or something to that affect? HELP i need answers fast!! Thanks
can you give more details?
why the need for a partner?
have you run an ad for the property yet "rent 2 own property"?
Partner or Buyer, whichever comes first....want to catch up payments....seller is behind....gonna take over payments......am doing a 36 month Sub/To with Seller......hope this makes sense......
Are you doing a Subject to deal or a lease option?? It sounds like you are dealing with someone in pre-foreclosure who is behind in payments.
My suggestion would be to borrow $12k from someone and pay them 12% interest secured by a Second Trust Deed on the property since there is already 1st in place. Then you can turn around and sell the property.
Tell the seller that you are going to help them out and save their credit. Get the deed, make sure you have good title, catch up the back payments. Then turn around and re-sell it.
Best Riches,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."[ Edited by JeffreyAdam on Date 08/03/2004 ]
Great advice, JA! I'd even be willing to pay 15 percent interest. You should get a lot of interest (pun intended) from people in your area by placing an ad that says, "Will pay 12 % for $8,000 secured by mortgage." Of course, you could take the Option Consideration to catch up the payments, but due to the dollar price of the house, an outright sell might be better than a L/O.
outright sell better........ why?........is $2800 monthly too much for a lease/option/purchase monthly note?
I suppose that would depend on the area, but it is a rather high amount.
Why not go for it all and ask for 50k down and 3500 per month?
Ok Miracle, would someone actually pay that much monthly? :-D
No, they wouldn't. I really feel like all of your numbers are un-realistic.
Now Miracle, that wasn't very nice :-x .... toying with my innocence and ignorance on this matter ... :-(
)
LeaseOptionKing, how would you word a letter/flyer to potential partners (or, people who i might borrow the $8,000 from)....... Would i explain the deal in detail, detailing everything about the property, or would i just put it as you did: "Will pay 12% for ............". If i were presenting this letter/flyer/deal to you, what would make you jump at the chance to partner with me on it?......any pros in this department feel free to respond....(Not you Miracle,
Not a partner, just a person who wants to earn a secured 12 percent. I'd make the note interest only with principal due in six months (or less).
I'm still lost as to how i would word it "exactly", any help in this department.......and again, would i need to explain the details of the deal or what?.....thanks guys/gals
You just want to get your phone to ring with a short ad, and yes, you would then explain the details.
Yeah, I was just reading back through this. Man, $2,800.00 a month note, on 280k? And, you're aiming for people with dinged credit? hhhmm I agree with the other poster, I think that all those numbers are to high.
I think it's too high as well but if you're doing a lease/option on a property and that's the monthly note, what else can you do?.........pay a portion of it for them, i would think not........but another investor here said to me that "there are people out there who have that kind of money and want to live in that kind of neighborhood, they would definitely pay it"...........am i to believe that no one else here has ever heard of or dealt with a high-dollar a month property like this?.......i hope that's not the case, because if it is, who will answer all my questions???? :-(
It depends on the area, of course, but yes, you can price yourself out of a L/O. Sometimes you can get an executive to Lease it if it's luxurious. I stay in the mid-to-high-mid range.
common sense dictates $280k - $12k = $268k @ say 8% = $1966.49 / mo. or even say 9% = 2156.39 /mo....how do you realistically get $2800. /mo....or are you going to have an $800-900 rent credit per month...regards, CWalker
Cwal, first let me say that common sense only dictates when you're in the know or when you're familiar with something, versed in a skill......so save that nasty little comment......secondly, how did i come up with $2800/mo?........ that's the monthly mortgage payment dear......i do not post to have negative comments returned, i post my questions here ONLY to learn......and, if my seemingly lack of "common sense" bothers you, why not pass on to a more intelligent sounding post......have a good day......LeaseOptionKing, thanks for all your help!! :-D
a little touchy aren't we...let's get down to brass tacks...why would anyone pay you 12.2 % on a balance owed when 6% is the norm...i mentioned 8 & 9% as a high end...if you have a 12.2% loan (presuming 30 yr.) and you can't or haven't refied your chances are slim & none in this climate of anyone giving you $2800./mo unless you give them a healthy monthly credit of $800.-900...you needed answers...not me. regards C Walker
RealEstateBrain:
Take my original advice. Did you know that less than 50% of lease options make it to the closing table??
What are you going to do if the people you lease option to stop making payments 3 months into it and refuse to leave?? I have seen that happen. They also stripped the house on the way out. Not pretty.
I would go for the deed, make up back payments and re-sell the property or I would get the deed and "wholesale" the property to another investor.
Best Riches,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 08/06/2004 ][ Edited by JeffreyAdam on Date 08/06/2004 ]
Jeffrey Adam, thank you so much for your help....Cwal, touchy, yes when folks come here for answers and people like you try to scare them off with your rude replies.........didn't anyone ever teach you that if you didn't have anything nice to say, to not say anything?.......on this board, as long as it helps, it doesn't have to be nice, but for some strange reason, you appear to be downright nasty.....again, Jeffrey, thank YOU so much for YOUR assistance!