I need advise guys. I am a Realtor and I am looking to purchase a property for myself as I am recently divorced. I found a condo/conversion and the Agent/Owner can get me into the property for $500 down and seller paid closing costs with seller financing $1700 a month and $40,000 at the close of escrow. The building is in a good area and the units are top of the line (travertine, granite, bamboo flooring, all new stainless steel appliances, he even offered furniture and plasma…I kid you not) I did not tell him that I was an Agent I just listened to what he was offering. He says that he and his partners buy properties in bulk and that’s why they can offer what they are offering. I pulled up Title info. on the property and these units were bought in July '07 for, you won’t believe this $550,000 for 40 units, mind you the building was sold in 2002 for 3million dollars. I could live in the unit but I am thinking of lease optioning it out because I want to find a house. The negative is that they are asking $550,000. Which is more than I want to pay for a condo(I plan on offering less). Do they have comps to justify? yes they do. Is this a no brainer based on the seller financing. The building is older built in the early 70’s however the units are all tricked out. What do you guys think?
Um, no.
You don’t mention your market, but who would pay more than $4000 a month to lease option a condo?
And “tricked out” condos? Condos are the last to recover from downturns. Would you want a buyer/renter who has stars in his eyes because the condo has a plasma? Where are the priorties? Better yet, what happens when this person wants more tricking out, rims, ice, or dice and skips paying the rent?
Skip the bling.
um, maybe you didn’t see the seller financing $1,700 a month
Maybe I didn’t make this clear. The seller is going to finance, the payments are going to be $1,700 (PITI), fixed rate, and he is going to credit back $40,000 at the close of escrow. Any input is appreciated.
redrover,
Your post isn’t very clear. If I understand this correctly, the owner bought 40 units in July 2007 for $550,000. In other words, they paid $13,750 per unit. Are you talking about buying one unit for $1,700 per month or all 40 units for $1,700 per month? How much are you paying and for what? $550,000 for one unit? $550,000 for 40 units?
Mike
The owners bought the whole building of 40 units for @550,000. I am in Southern Ca., and the area is a very sought after location. Individual condos in the area sell for 500,000 and higher. I would be buying 1 condo. He is highly motivated due to the current market. He is offering the financing so that I would pay 1,700 per month. Rents in the area for a 2 bed are anywhere from 2,000-2,200 per month. Thanks.
So, what is your purchase price and what are the terms? If you’re paying anywhere near $550,000, that’s a pretty good for the owners. They pay $550,000 for 40 units and you pay for their entire deal with one condo!
Something doesn’t sound right to me. The place sold for $75,000 per unit in 2002, $13,750 per unit in 2007, and a month later you’re willing to pay $550,000?
Mike
I’m alost certain you are mis-reading the title record. Either there a new 2nd loan in 2007 or the current owner bought it subject to the existing first.
Even with the continuing press population growth in SoCal, 550k for condo is not a good deal unless you have an ocean view. Even then, these older units are a dime a dozen all over the place. Condos make poor rentals also as the HOA fees will suck the cash right out of your pocket. With a $1700 PITI on $2000 rent you will certainly lose money. Plus your time horizon to gain appreciation on a $550 purchase price might be…well, let just say a day short of never.
Mike in OC