Mike and Nate,
Thanks for replying.
Would you PLEASE elaborate a bit more on L/O.
// Ronnie
Lease/Options are also known as rent to own. Basically its taking all the landlording out of the property. You agree to sell a property for X amount with a non-refundable deposit and agreed monthly payments usually on a 12-24 month lease. They are responsible for all repairs to the home and carry the responsibilty of being a homeowner. If you have to evict you work thru the normal eviction process in your state.
The biggest difference between renting and rent to own is the above and also that 100-200 bucks of the rent money goes towards a credit that is given at the end of the term if they buy the home. If they don’t buy the home then they forfeit their deposit and recieve no credit money. Its important to get a nice deposit (say 1-4K) so you keep them in the game and so they work on getting their credit repaired, making strides to get financing, and keep the home in order.
Nate-WI
I think REO success depends on what is happening to the real estate market in your area.
2 quick REO stories.
My first investment property was an REO.
ARV"Actual Sold Price" = $126500.00
Construction Costs = $20150.00
Purchasing, Selling, Carrying Costs = $11929.00
Profit = $11921.00
Purchase Price: $82500.00
I offered the bank $82500. They came back and said “no way” since the list price was $99K. Then they said that they would sell it for $87,500 and give me $5K back at the closing table. This was great because it actually reduced the amount I had to bring to the table and I got my price.
My next REO is the house I live in that I purchased in 2002. House was listed for $649K, then sat on the market for a couple of months…right before the market started to get hot in our area. Was reduced to $599K. The house was easily worth $600K, and I offered $555K they countered and we settled on $565K. Not a great discount, but they accepted the offer, I think, because I told them I could close in 12 days. My lender said to give them at least 30 days to get it done and the bank was fine. We presented the offer with the loan approval letter and they did not care when we closed.
I think many would agree that banks are quickly becoming more flexible as foreclosures are on the rise…along with short sales and banks having to take back more properties.
An offer on an REO I recently made was not accepted. The agent held out and got $60K more than I offered. But, the agent did respond and came back with what the bank would accept…which was about 35-40K more than I would pay.
18 months ago, the agent probably would not even have responded to my low offer.
To your success!!
do you use agents to submit offers or do it yourself ?
You have to go thru an agent to submit an offer on a REO or at least go thru the listing agency to write an offer.
Nate-WI