Try This One On For Size
Older guy, i wouldn't call him an investor, he just owns 2 houses. Sold one last year, and selling another now. He wants to retire and move back to Portugal. Anyway, Id say the house is worth around 300k, id like to sell it for 289k. He is asking 259k, and i want to offer like 225.
He owns the house F&C. I want to try and structure this creativly, but want to put down the least amount possible, and try and lock it up in a P&S so I can market it at 289k. Any suggestions or thought? thanks in advance.
I'm meeting with him tommorrow...need help on this one guys!!
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Somewhat new to this...Regarding Older guy transaction, what is a P & S? :-o
Purchase & Sales Agreement
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Birddog1;
If he wants to really sell now start negotiations with him on a lease option level. Explain that your an investor and the most you could offer to purchase it is 230K. Explain that the only way you could offer more is to lease option the property thereby reducing the costs normally involved with getting a loan on the property and that in the interest of getting him on his way you would pass these savings on to him by offering a lease option to purchase for 240K. If he is open to this he may want to negotiate upwards. So he says I can't take less than 245K. o you then return with an offer of 142,500 but will only put down $2,000 at that price. The key is to negotiate your hidden interest of low down with the negotiation of price. Who knows you may get him to do it for $1,000 down. Now if it does not need any work this still leaves you with a gap of 46K of which your costs will be an agent fee approx 14K, carrying costs etc at most probably 7K, leaving you 20K profit on a $2,000 investment.
Once you get it under lease option, market to sell it and set up a dual closing with the seller and your buyers. You walk out with your profit.
TBARBER
ok, so to structure a lease option would be my best bet. What is the best way to explain a lease option to him (and myself)?
I ran into the guy at work (home depot) and he was looking to buy a fsbo sign, so i know hes motivated, and I ended up talking to him for a good period of time. What if he bites the 230? Could I structure something with him for 0 down, and still do the "lease option" and then sell it? And would i be selling it, or assigning it? I have a lot of questions for a short period of time
To make this long story short, I'm not sure exactly how a lease option works, so I can't explain to someone if I don't know myself.
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"Luck, is when preparation meets opportunity."
[ Edited by Birddog1 on Date 03/23/2004 ]
Let me interject a little here and see if anything I say helps.
[ Edited by Stockpro99 on Date 03/24/2004 ]
Basically you are going to lease the property from him for a period of years (I would hope for 5) this is one contract. The other one is the purchase option at a price that you both agree upon any time within the next 5 year lease period. You should make sure that your option is assignable if possible.
Option consideration is dependant on several things and is also negotiable. He may go for 2K or you might tell him you will give him "X" $ when you have a tennant in the house or 30 days etc. etc. etc.
Basically you are going to explain to him that you are going to provide him with a steady monthly income while he is enjoying the sun in Lisbon and that your real desire is to purchase the property at which time you will give him the money he wants.
There are many ways to play this, if the property is in a fast appreciation area of say 8% then in one year it will be worth 324K and in 2 almost 350K ( for a current value of 300K home).
If I could make the numbers work out I might offer him the 260K for the house and get a tenant in there to lock in future profit. YOu might also get a tenant buyer in there at 97% of 2 year future value price and a nice option consideration (non refundable).
To sell to him you need to make it appealing to him. You will be able to give him a higher price if he agress to your terms, and he will be receiving a nice monthly check....
Birddog1
You live in a hot market. Whether it was Plymouth or Brockton area.
I would see if he would deed the place to you. You take out a first for whatever he needs to get him back to the old country and give him a 5 year ballon for the difference mabe interest only so that he has a small income.
The l/o might sound like less commitment on your part to him and who wants to play landlord from the Azores
My 2 cents
Best of Luck
JohnNH
birddog1,
Sounds like this guy wants cash since he is leaving the country. If he owns the house free and clear, unless the market has negative sales, he should be able to sell the house pretty quickly at the right price. Why would he be interested in giving you any sort of owner financing. It just doesn't make sense. He will be 2,000+ miles away. Most people I've dealt with that are leaving the country, particularly for good, will not want to leave any loose ends behind.
At least you know he is not a bad guy. If he was he could get a bunch of new loans on the house and split.
IMHO,
JohnCl
[ Edited by JohnCl on Date 03/25/2004 ]
How about an option?
I believe that at the end of the day, if nothing else works, you could at least get an option on the house. Try to make it exclusive. If he's smart he will not make it exclusive, but its worth a try.
Just another thought.
JohnCl
What does he owe?
Will he sell for what he owes to just be done with the thing?
Bird Dog, the basic principle in making money in real estate investing is that you make money from solving people's problems. The greater the problem, the more potential profit you can attain throught your creativity.
This guy doesn't have a problem! He'll simply sell the property, pocket the cash, and move back to the old country.
I wouldn't waste brain power on this one. Go look for a deal where you can find a bargain by using your knowledge and creativiity.
I went to the house...needs work. "It's all original wi ndows from the 1950;s! Anderson" he says. The draft was terrible. No dining room, and no room big enough to even put a table to eat. Nothing to be made here. I checked back with the guy a few weeks later, and still nothing interested. HM. wonder wh y
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