Need Professional Opinion About L/O!!!

To start off, I am definately a beginner <IMG SRC="images/forum/smilies/icon_confused.gif"> at real estate investing. I have been reading for weeks now about L/O's, but I haven't yet invested in buying a course. Here is my situation that I'll spill out to you guys.

I have been living in my house for a little under 3 years now. It has been listed with a realtor for sale for almost 6 months with no offers!! I believe what I am asking for this house is the actual FMV of the house (using comps in the subdivision). It is currently listed for $109,900. It is a 3bd/2ba 1460sqft ranch home with the works....clean in and out(blt in '93)!

This house just isn't selling in my neighborhood, and lowering the price would put me in the negative, which is what I would NOT want to do. I have VERY little equity in my house, as I have a VA loan, with no down payment. (I am active duty in the military, thus the reason why I have to sell my home; I am going to Officer Candidate School in Pensacola, FL).

So, I learned about Lease Options from a buddy of mine. I have been reading about it ever since. Most of the posts on this forum that I read talk mostly about REI's that go up to "disgruntled" sellers (like me) that have had their home on the market for a long time, and the REI's basically get into a L/O with the seller and profit off it by sub-leasing it out using a L/O to another T/B. What I am trying to do is cut the REI "middleman". QUESTION: I guess I am trying to ask, is it in my best interest to try and do a L/O with no experience in RE, on my home that I have been living in for almost 3 yrs now? Opinions?

As with any REI, I would like to make a profit on my investment. I feel that if I don't get a great offer soon, L/O would be the best bet. My PITI is $857 , and I still owe about $97k (FMV is $110,000 I think).

Would L/O be the best way to go?

One more, do you prefer a novice to talk to an real estate attorney to help me set up the contract and rules (I found lots of samples online but none that really fits well for me), or do you think I would be better off spending my money somewhere else?

So far, all the contracts I have downloaded for free or sample contracts that come with articles, don't have a "separate" Option agreement. The option agreement is blended in with the lease agreement, and it refers to the option in the lease agreement (which I read is bad). Should I pay for a contract, in order to get the option agreement separate from the lease agreement?


I'm sure more questions will follow soon. I really like how you veteran investors are more than willing to help out us beginners in real estate!!! Keep it going PLEASE!! <IMG SRC="images/forum/smilies/icon_biggrin.gif"> [ Edited by D_mac05 on Date 08/22/2003 ]

Comments(8)

  • bginvestor21st August, 2003

    If you assume about 9% for commision and seller's costs, you could lower you price to 106k and break even, right?

    This might make the house sell quicker

    Bginvestor

  • D_mac0521st August, 2003

    With my numbers, it would be $107k to break even. But, for being in this house for almost 3 years, I don't know if I want to settle for coming out "even". That's probably why I haven't lowered my price any. What do you guys think?

    Thanks for the reply.

  • webuyproperties22nd August, 2003

    How about cutting out the realtor? Do a FSBO... Or, advertise in the paper that you will sell it on a contract for deed. If you sell on terms, you can usually get your price. Of course, with you moving out of the area, you might have a difficult time with a CD or L/O.
    Just a thought....

  • RepoMan22nd August, 2003

    D_mac05,
    There are many folks out there that may not qualify for a mortgage right now although they have a good income. Some of these folks will be more than glad to L/O. Say 5 years, tagging $200.00/mo to the monthly payment, A $5000.00 deposit and a final price of say $125,000.00. If after 5 years they decide they do not want to buy, just do it all over again.

    If you do just want to "unload it". Get rid of the realtor, drop the price, sell it yourself and you will do much better.

    Repoman

  • loanwizard23rd August, 2003

    My friend, you are not a motivated seller, and that's OK. When given a few options you have brought up the fact that are not willing to break even after 3 years. Why has the house not sold or gotten any offers after 6 months? Has there been any showings? Does it have purple shutters? Any Cracks in the siding, or foundation? Does it have dated light switches? Does your agent not advertise it? Or is the price too high for the market at this time? Remember, rates are starting to tick upwards, which means that a 100k 6months ago does not equal 100k now. You can L/O the property yourself. The problem I see, is with you going to Pensacola (Congratulations) you may become a long distance landlord. Remember the T/B does have the option to walk away. Remember, in this business, pigs get fed, hogs get slaughtered.
    [addsig]

  • 23rd August, 2003

    This is simple all V.A. loans are assumeable. So what you have to do is tranfer title to a new buyer and you accepting a new 2nd mortgage leaving the assting morgage on the property. This is called a Wrap arround mortgage o all inclusive trust deed. Absulutly no qualifing for the buyer and you can ask for a premium both on intrest and sells price.

    Good luck.

  • D_mac0523rd August, 2003

    Loanwizard,

    Thanks for your response (and congrats). Actually, it has had a couple of showings. Everyone said that it showed really great, and they liked it. Some said that it was the best of all houses that they've seen so far. So, that leads me to believe that my price shouldn't be too far off, and that it should be sold soon. But, it hasn't yet (still got a couple of months). L/O is my back-up.

    As far as long-distance Landlord/Tenant relationship goes, unfortunately my wife will be here (in Indy) for atleast another 8 months or so. (I'm going to flight school after OCS, and I don't need the distraction) . So, I think I will leave the responsibility up to her (that's scary). But, she can look after my interests while I'm "playing" if FL. After she leaves, I have other fam. members that I could "hire" as "property managers" to check up on the place, so it doesn't go to shit.

    Have some of you had bad experiences in long-distance landlord/tenant relationships? I've heard that a couple of times now.

    Thanks for the help guys.

  • D_mac0523rd August, 2003

    Oh, Flyhomes....

    I forgot to reply to you. What you are saying sounds great, but as you probably read, I am a NEWBIE. Meaning, I don't have any RE experience whatsoever.

    However, there are other "veteran" investors on here. What do you guys think about flyhomes idea? I kinda understand it (I give the buyer the financing, and charge a high interest rate/sell price for profit).

    Is this something that I should mention to my realtor about adding to the MLS to market? Or should I wait until my contract expires (in 3 mos.) and market it myself?

    Thanks for the reply Fly Homes

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