Just had a Realtor inform me that there is a couple wanting a certain style house in my town. They dont want to wait on financing. He suggested I buy the lot, bring in the modular home, then lease option to them. Here are his numbers:
T/B:
Purchase Price: 175k
Rent:1200/mo
Term: 1-5 years
The property:
Lot - 30k
Site prep and foundation - 7k
Prebuilt home delivered - 100k
So basically put 140 into it and later they buy for 175.
Anyone else seen anything like this?
Tell me this…
Forgetting their option price, what would this fetch on the regular market if they fail to buy? Don’t forget, they have an OPTION and don’t have to buy it. What can you sell for if they fall through?
Yeah that thought finally crossed my mind and I passed. He said they would make a down payment, but even if it was gaurunteed they were going to buy, I dont like the idea of my tenant buyers being chosen for me.
Why don’t you screen the tenants before you decide? Then you would be choosing them, if they pass your screening.
You’re still building for ONE person, what happens if they fall through? Is the house priced properly that it can be leased to someone else or sold if need be? What’s the exit strategy when this buyer fails to execute the option? It’s still an option, not a guarantee.