My Bid Got Accepeted!!!!!!!
I guess now I have to get a City Inspection and close by November 5th. The house is really cute, I really only NEED to paint but I WANT to put in A/C, new windows, and remove a ceiling fan an put in a light fixture.
Now here comes the questions,
-When should I start looking for a t/b?
-When doing L/O, should I not take option money as not to confuse matters if I ever have to evict them?
-If I do take option money what do I do with it.
-When the t/b goes to get financing, won't they have to put a down payment down for their loan? Would the option money be considered their down payment money towards their own loan?
I'm confused about the whole rent credit thing so I really don't want to go that route.
Last question, If my mortgage is only 530, can I charge 695-700 an not have any of it be considered interest in property money.
Thanks guys
Quinn
1. Lets address the specifics for the transaction. Use a separate lease and then an option agreement. The option agreement basially says that for the option to purchase this property you will put down X. You also put in there that upon and only upon excersing this contract that X dollars per month of the lease will be credited at closing.
This is not taxable income, yet. During the lease period you will need to fill out a Schedule E tax return which will list your income (rents) and expenses (mortage interest, etc).
NEXT
Only do what you must to get the property up to par. Paint, yes. New AC, maybe ($1200). New light fixture (probably as it is only $100 or so). New windows...depends...does it really need it?
Putting money into a home will do one of two things: Increase the value of the home OR increase how fast it sells.
Keep in mind that people buy on EMOTION and emotion comes into play with the 2nd part of my message before.
Hope this helps...good luck!
Good one MyFrogger......
Quinn...To answer your questions. You want to add curb appeal to the property in order to sell it.. will make them want to come in (what you do is what your budget will allow)
Spruce up the outside that will make them want to stop and come in. You can do this by adding flowers, paint the front door or replace it. Add double lighting fixture (one on each side of the door) use gold for the fixtures, use a kick plate in gold, add a new mail box, make sure the walk way is clear, with now obstructions.
Once they are in (depending on your budget) you can make the following things happen: Paint the inside, change the lighting fixtures, change the electrical fixtures/switch plates, new shower curtain, new mini blinds, carpeting in bedrooms (you can use a mid-grade carpet with a high grade padding-this will give that good plush effect. Tile in kitchen and bath - refinish what you have if necessary. Kitchen cabinets should be in good shape allow with the handle. If you choose to add appliances, get a good stove, dishwasher, garbage disposal, hanging microwave...etc....
I hope this was of help. Once again, you don't have to do it all, it's just to give you some idea's. Just don't go overboard where you spend to much money.
Good luck~
Regarding lease option: I would take an option consideration fee in the amount of 3-5%. If you don't want to put a number on it, ask the potential buyer how much do they have to put down. You can also charge the consideration fee plus first months rent. The option fee is yours to keep regardless because it goes towards the down payment of the house. The first months rent is used to pay your next mortgage payment without touching your opt fee. You don't have to have a rent credit if you choose not to.
As far a what to charge for rent, that would depend on what you want to charge for an interest rate. Most people charge anywheres from 9-12% for a rate. That would determine what your buyer will pay, whcih will cover all of your expenses in operating that home. If for some reason your buyer does not make the payments and moves out, you can lease option the property to someone esle with the same arrangement and make another 3-5%. Do a lease option and a rental agreement. Depending on your state, when you go to evict just on a lease option, you will have to do foreclosure proceedings. But, with the rental agreement, that falls under the renters agreement (for eviction purposes) do not refer one to the other when you write the agreements up (may cause problems when trying to evict...
Good luck~