Investor Desperation-ideas Needed
Investors have been snapping up new townhomes in a PUD outside of Wash. D.C. They cant rent them and cant flip them because there are too many on the market. There were recently 10 rental ads for new TH's in the paper in this area. I'm sure I could get them to unload these alligators at a discount and forfeit the built up equity but I need a surefire way to rent or flip. The builders are still sucessfully selling new as new home buyers prefer to select their own options etc. I've thought of offering the new homes sales managers 2% to steer prospects to me. Any ideas welcome.
Hi,
Can you elaborate on the 100% rent credit.
Is it like stay 12 months and pay 11 months rent?
Sorry about the naive question.
Thanks
100% rent credit means 100% of the rent is applied toward the purchase of the home.
[addsig]
So, hey, how would a 100% rent credit put cash in your pocket, and how would you make the payment??
Looks like there may have been a thread gone missing here, this morning someone suggested a lease option with 100% rent credit, which, in reality would go toward the mortgage payment and in your pocket but come option time would apply toward the purchase price, meaning if you had paid $1,000 a month for 24 months, at closing time there would be either a 24,000 credit or the price reduced by 24k. I am not the one to suggest that, just answering what 100% rent credit means from what I understand.
[addsig]
Thanks for clearing the air.
So in essence the 100% credit might eat into
the profits.
Lets say, the cost basis is $300K.
The rent is $1500/mo. Thats $18000/year.
Say in the contract, we word it such that after 2 years
the renter has the right to purchase the house and
at which time the paid rent will be credited to the
purchase price.
So the discount would be 18000 x 2 = 36000
2 scenarios
a) The property goes up to say 400K, then the
profit would be say 400 - 300 = 100K - 36K = 64K
Pay the broker fees etc, you would be down to
say around the 40K range. Not bad either.
b) The property value goes down and the owner
does exercise the option, now we are out of the
money, eating into our cost basis.
Should we add language in the contract to avoid the
renter to exercise his right to purchase if this were
ever to happen?
I am sure the renter will be able to find comps in the
area for about the same price, but he has his credit
that will make him shoot to pick the one he rents.
Thanks
Krish