Investor meeting with seller tomorrow

I have a meeting with a seller tomorrow. The house is being sold by the owner. They will be moving out of the area within a month due to a job relocation.

After talking with both of the owners for a while they would be willing to talk to be about a lease option. Since I have never constructed a deal with a lease option. I need some help. They have only been in their home for about 2 years.
They owe about $110K, piti $1123/mo., they are trying to sell it for $123K. I think the home is worth about $127K. It is a 3bed 2bath home with approximatley 1700 s.f.

How should I make my offer and terms for the home?

Comments(8)

  • MrSmooth19th March, 2002

    Put in an offer for a lease option with $1200/month with 25% going to the down payment. I would purchase it for around $125k since it is a lease option. Or I would purchase it for $123K plus improvements you make to the property.

  • 19th March, 2002

    Personally I don't do lease options I would see if he is interested in a seller cary-back if so I could help him


    structure the deal so he will get the most out of his note in either a simultaneous close or of full or partial


    purchase of note or sale at later date depending on their needs.

  • cyndyB19th March, 2002

    If you do a lease option. Make the offer have rent money going towards the down payment.

    I also find it peculiar that the seller is willing to do a lease option even though they are moving out of state.

    • kjshomes20th March, 2002 Reply

      Make sure that if you are going to do a L/O (especially with someone moving out of state) that you get them to put the house into a land trust. This will help if there are any lawsuits against the owner, AND will help prevent a line of credit from being established against the property. The Trustee is the only one legally able to set up a line of credit.

    • 19th March, 2002 Reply

      I noticed the same thing cyndyb. When I relocated, I had to sell my property.

  • 19th March, 2002

    First, have you offered to buy the property "subject to" the


    existing loan, with the agreed upon price difference, if any, in a second


    note? That would be the cleanest way. If they are not agreeable to that,


    I would try this approach. Do a lease option, for say 115K, with nothing


    down as option consideration, for 3 years. Payment of $1200/month, giving


    them a small profit of 70 bucks. First payment in 60 days.


    Now, what will the place rent for fair market value? Try to get $1500/


    month. That will give you some positive cash flow, but you really want to


    sell it on another lease-option, for fair market value, say 130K, with


    $5,000 down, a 1 year renewable option. When the tenant-buyer exercises


    their option, you will receive $125K, plus the $5K down and the $300 per


    month positive! Toatl profit? 18K! Not bad for NOTHING down!


    If they do not exercise their option, then you keep the monthly positive,


    their option money and do it all over again! Only this time raise the


    selling price to 133K. Hope this helps.

  • 19th March, 2002

    A couple things.


    first have you run your comps, checked out the back-end, and tried CFD or


    Sub2? A lease option gives you very little control in the situation and


    unless the seller wont go for it, don't use it. have you signed anything? if


    yes, what?a PSA? i dont have enough info. AHHHHGGGG!!! sorry, frusterated.


    have you done ANY Due diligence? have you got the contracts you need, with


    the proper exit? what's your market right now? can you afford to "EAT" this


    one if you have to?


    What's the SELLERS MOTIVATION? from what you've said, doesn't sound


    motivated.

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